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Jun 23, 2016
, Reuters
TORONTO - With home prices booming and fears of a bubble, Canada's finance minister on Thursday announced a working group of federal, provincial and municipal officials to recommend policy changes.
The panel, to be formed within days, will meet throughout the summer to review supply and demand, affordability and the stability of the market, Finance Minister Bill Morneau said.
The move suggests a new round of regulation changes to tighten mortgage rules is not imminent, but could come as early as the fall amid fears the market is overheated and consumer indebtedness too high.
The government will evaluate whether further steps are needed to protect borrowers and lenders to help maintain a stable market, Morneau added.
He and Prime Minister Justin Trudeau have both commented in recent weeks about high prices in Toronto and Vancouver, Canada's hottest markets, echoing concerns by some analysts who fear a housing bubble.
"I hear from people in my (electoral district) who are concerned they can't actually consider the possibility of purchasing a new home," said Morneau, who represents a downtown Toronto district, at an Economic Club of Canada event.
House prices have climbed since 2009 as low interest rates fueled demand. While the energy slump has cooled sales in oil country, particularly in Calgary, the run-up in prices in Ontario and British Columbia have pushed consumer debt to record levels and increased worries that both consumers and housing are in precarious positions.
Some experts have called for a flipping tax to curb speculators from buying and selling houses. Some want limits imposed on foreign investment to prevent wealthy Chinese buyers, among others, from driving up prices, particularly in Vancouver.
Morneau said increasing foreign ownership does make up "some element" of the high prices, but said population growth due to strong labor markets in Toronto and Vancouver is also a factor.
Canada has tightened mortgage regulations five times since 2008 in a bid to cool the market, shortening the length of loans and increasing the minimum down payment.
Morneau did not go into detail on potential methods or on a deadline for the group.
"I'm not going to speculate on conclusions before we make sure that we've done all of our homework," he said.
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