A major bank foresees additional government intervention following record-high home sales
Following home-sales highs in 2016, RBC warned of a greater chance that policymakers will step in to temper Toronto’s housing market.
“The likelihood of policy intervention to address housing risks in Toronto is increasing,” RBC economists said in the bank’s January Canadian Housing Health Check, as reported by the Financial Post.
RBC reported a continuing rise in prices in the province, particularly for single-family detached homes that are in short supply. Whether the expected moves to rein in soaring prices would come from the federal government, the Ontario government, or Canada’s financial regulator was not clarified.
Last year, Canada’s finance ministry tightened rules for mortgage providers while the BC government levied a 15% tax on foreign buyers to help bring down Vancouver’s astronomical home prices, which have gone beyond the average person’s reach.
Canada’s federal housing agency has also issued a statement reporting a second quarter of housing market stress from overvaluation and price increases. Six cities, including Vancouver and Toronto, were identified as hot spots by the Canada Mortgage and Housing Corporation (CMHC). Risk levels rose in Victoria while falling in Calgary.
“Price acceleration in Vancouver, Victoria, Toronto and Hamilton indicates that home-price growth may be driven by speculation as it is outpacing what economic fundamentals like migration, employment and income can support,” said CMHC chief economist Bob Dugan.
While there’s been a slowdown in the Vancouver housing market, analysts disagree over how much of it was due to the imposed housing tax. Ontario is downplaying the possibility of a similar tax measure, but has stopped short of ruling it out.
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