National Post (National Edition)
Calm urged in housing sector
OTTAWA • Federal officials delivered a vote of confidence in the country’s housing sector and banking system, telling lawmakers that Vancouver and Toronto’s real estate markets are supported by fundamentals that leave risks wellcontained.
Senior officials from the Finance Department testified Wednesday evening to the Senate finance committee, fielding questions about the stability of the housing market, risks posed by high household debt levels and the downgrade of banks by Moody’s Investors Service Inc. The hearing came amid questions about the future of Home Capital Group Inc. and any effect that a potential failure there could have on the housing sector, particularly in Vancouver and Toronto.
The core message from the officials was the market was stable and, despite some risks, policy makers’ measures are taking effect.
“We don’t think there’s any systemic risk across the country,” said Phil King, a director at the economic and fiscal policy branch at Finance Canada. “There are specific pockets of concern, which seem to have ameliorated somewhat in the very near term but we’re keeping a very close eye on those.”
Vancouver and Toronto have “very, very strong fundamentals” supporting prices including immigration, strong job creation, strong income gains and high wealth, he said. King described a national housing market with distinct regions — surging Toronto and Vancouver, soft markets in energy-producing regions such as Calgary, and cities like Montreal and Ottawa where policy makers have “no concerns.”
In Toronto and Vancouver, he said, recent “exceptionally strong growth” in prices is more problematic. A foreign buyers tax and other policy measures “appear to be working” in Vancouver, King said.