The future of Toronto and Vancouver housing market in the context of homes prices remains uncertain, and although according to the finance Minister Bill Morneau, increasing home prices in these cities are been driven up by low unemployment and higher incomes, however the government is not relaxed on keeping a close eye on the real estate market.
The minister’s statement was in response to the growing concerns of leaders over the Toronto home prices.
Dave McKay, Royal Bank of Canada CEO suggests that the high prices in Toronto warrants a similar foreign tax implemented in Vancovuer to be used in the city. However, Doug Porter, Bank of Montreal chief economist believes that Toronto should first of all recognize that the city is facing a housing bubble.
Ottawa is also receiving warnings from executives of financial institutions to remain cautious about the ongoing situation.
Finance Minister shared his opinion about the housing situation in these cities during a visit to New York to Columbia University students stating the government is bent on finding solutions to the housing crisis. “We have vibrant underlying markets in the hot real estate markets hence unemployment is lower at these two cities. Individual’s wages are higher and the economy is strong. This gives reason for the real estate market to grow and so the government is keeping a close eye on the market.”
The minister’s comments emphasizes the government’s wait-and-see approach to determine the effects of the newly implemented regulations and mortgage policies introduced to bring down home prices.
Last year, the government made several mortgage changes including a stress test.
However, the Bank of Nova Scotia CEO Brian Porter also spoke in line with the minister’s comments suggesting that it’s best to wait and see how the new regulations unfold.