IMF Cautions Against Discrepancies In Canada’s Housing Market

The housing market in Canada was given a warning by the International Monetary Fund and the increasing household debt. The risk face in the real estate market “raise uncertainty about the durability of the Canadian recovery” as mentioned in a statement following a recent visit to Canada by the IMF. The business investment and non-energy exports are weak even the economy shows to be in a good condition.

The $1.5 trillion mortgage in the Canada market was noted in that statement to have been “important in sustaining private consumption,” on the other hand, it cautioned on the increased households debt and housing affordability problem in specific areas like Vancouver and Toronto.

The downgrading of the six major banks in Canada was outlined by IMF, in consideration of the worries and said that a severe correction in the real estate market would have a hit in the balance sheets. IMF cautioned; “Financial stability risks could emerge if the housing market correction is accompanied by a severe recession.”

IMF suggested in the statement means of having additional tightening on the macroprudential policy to have the flexibility of household and the banking sector properly secured. Even though the organisation are not in agreement with the endorsement of the levy on foreign buyers, they would prefer having the policy tackled property risk-takers other than having non-residents discriminated.