The complaints that have been coming in concerning the house prices that are soaring higher by the day in Toronto and Vancouver has been loud and clear. However, CIBC Economics said that the housing bubble does not necessarily have to be as bad as others see it for the country.
In the report, it stated that: “While some might welcome a cooling-off period for these markets, the same can’t be said for the Canadian economy.” It pointed out that it will take a long time before the price of energy increases. The country’s export is going down the drain. Thus, the report contended that the robust real estate market doesn’t have to be deemed as a bad thing as long as proper procedure is part of the combination. There should be a supply of more housing units, jobs and ways implemented to keep the employees busy with their job. Although it won’t sort out things straight away but it will increase supply and “cushion further price appreciation” to an extent.
The report suggested that by allowing more land to be used for house construction, it will help speed up the endorsement procedures and provide extended accommodation by improving public transportation. In the metropolitan areas, encouraging more construction will help rent prices. As the units increase, the prices level will also go up, which will aid employers to hire people that will be able to pay for houses in the area they work in.
Even though the housing market is going bizarre and may be a cause of alarm for some, Canada still has the opportunity to make good use of the power of the housing market. The report concluded as it stated that “The memories of the U.S financial crisis has left the impression that all house price booms end badly for the broader economy. With the right policy mix, it needn’t be so.”