The Vancouver housing market has pushed further into rarefied territory this year, but massive home price appreciation does not necessarily mean the market is experiencing a bubble, according to RBC Capital Markets.

The British Columbia government surprised observers on July 25 when it announced a 15 per cent tax on foreign homebuyers in the wake of red-hot activity that propelled the benchmark price for detached properties above $1.58 million in that month.  

However, a spike in buying activity and rising values is not enough to label what’s happening in Vancouver a bubble, according to RBC Capital Markets head of Canadian equity strategy Matt Barasch.

“To declare something’s a bubble simply because a chart looks a certain way – and we think that that’s probably what a lot of people are hanging their hats on – is not enough to go on in our view,” Barasch told BNN in an interview on Wednesday.

He added that observers can’t equate what’s happening in Vancouver to the U.S. mortgage crisis that helped fuel the global credit crunch and subsequent recession.  

“This notion that this is a ticking time bomb ready to explode is – quite frankly – it’s silly,” he said after stating that some slowdowns or even a pullback could be possible.

Barasch’s view comes the same day Royal Bank CEO David McKay said he was closely monitoring the “strong price appreciation” in the Vancouver and Toronto real estate markets.

A forecast from Central 1 Credit Union last week predicted B.C. housing prices will continue to rise through 2018 particularly in light of demand in Metro Vancouver and Vancouver Island.

The next data to be released on B.C. real estate activity – and the first since the implementation of the foreign buyers’ tax – is expected from the Real Estate Board of Greater Vancouver on Sept. 2.

Barasch believes the province was acting in the best interest of its residents in implementing the levy on foreign buyers.

“The step that the B.C. government took last month is in no way, shape or form necessarily a bad decision,” he told BNN. “They’ve got to act in the best interest of their constituency and they’ve seen these gains and they’re going to blame these gains at least in part on foreign investment.”

However, he expects a more measured approach from the federal government in regards to cooling the market.

“The federal government seems hyper-sensitive to that issue and they realize that ‘maybe we do need to take steps to cool off some of these gains that have been happening, but we don’t want to do anything that has the so-called unpredictable outcome,’” he said. “It’s a risk, but in our view, it’d be a fairly low risk that the government is going to do something here that really causes a lot of damage.”