The government's efforts to cool the housing market will have a negative impact on the economy and the range of industries that depend on house sales — everything from mortgage financing to furniture and appliance sales — warned the Canadian Association of Accredited Mortgage Professionals (CAAMP).

"Until now, housing has played a major role in the recovery from the 2008/09 recession. That economic driver is disappearing as we see housing-related jobs dry up and consumer confidence erode at a time when the national recovery is struggling to pick up steam," said CAAMP's chief economist, Will Dunning, in a press release.

CAAMP released a report on the economic implications of the weakening housing market authored by Dunning on Wednesday.

In it, Dunning predicts that there will be 25 to 30 per cent fewer housing starts across Canada by mid-2015, and that will cost the country 150,000 jobs.

In April, seasonally adjusted housing starts were already down 15 per cent from the 2011/12 average, the report said, and that trend will continue.

Toronto, Vancouver will be hardest hit

CAAMP estimates that the Greater Toronto Area will see a 50 per cent drop in housing starts by late 2014 and a loss of about 35,000 related jobs by mid-2015. Vancouver will lose about 7,500 jobs as housing starts in that city shrink by a third while Calgary and Edmonton will actually see an increase of roughly 100 in housing starts a month each that will create a total of 2,500 jobs.

In cities with declining housing markets, job losses won't be limited to the real estate and construction industries but will affect sectors as varied as landscaping, renovations, legal services and moving, the industry group said.

CAAMP attributes the slide in housing starts primarily to the government's attempts to slow down the booming real estate market and rein in household debt by tightening mortgage rules. The Conservatives have introduced several changes in recent years, with the latest round coming into effect in July 2012.

Last year's revisions decreased the maximum amount of time that people have to pay down their mortgage (known as the amortization period) from 30 to 25 years; reduced the maximum amount that homeowners can withdraw when refinancing their homes to 80 per cent of the home's value from 85 per cent; limited the amount of debt as percentage of household income that Canadians can take on if they want their debt insured by the Canada Mortgage and Housing Corporation; and made any home valued at $1 million or more ineligible for CMHC insurance.

At the time, Finance Minister Jim Flaherty said the changes were aimed at encouraging Canadians to "borrow responsibly," but industry groups like CAAMP say Canadians are already doing so and that the stricter rules put too tight of a rein on housing-related economic activity. The value of house resales decreased by 8.3 per cent in the nine months since the 2012 changes went into effect, CAAMP said.

"The housing market, an important engine of growth for the Canadian economy, is slowing to such an extent that without any change, it could take another five years to recover," said CAAMP president and CEO Jim Murphy in a statement.

CAAMP's report, based on a Maritz Research Canada survey of 2,000 people conducted in April, found that 80 per cent of Canadian mortgages already have an amortization period of 25 years or less and that most borrowers repay their mortgage early. The report also said that 18 per cent of mortgage holders increased their payments in 2012, and only eight per cent took out equity from their homes.

The majority of mortgages taken out in the past year have been fixed-rate mortgages, the survey found, with the average mortgage holder paying a lower rate than last year (3.52 per cent versus 3.64 per cent).