New condo developments toronto . There is no bubble in the Canadian housing market! The Canadian Mortgage and Housing Corporation (CMHC), the federal housing regulator, warned last week that its latest risk assessment showed that as the Canadian economy recovers from the pandemic, it could lead to unemployment as high as 25 per cent, causing house prices to fall by nearly 50 per cent.
As soon as CMHC hit the ground, Bank of Canada Governor Tiff Macklem immediately responded that he was not worried about the booming Canadian housing market, making it clear that low interest rates and Canadian demand for more space, rather than property speculation or speculation, were responsible for the rise in prices.
The governor of the central bank said in an interview with Bloomberg that loose monetary policy, working from home during the outbreak and a preference for more space were the main reasons for such strong demand in the Canadian housing market, especially for single-family homes, the Financial Post reported.
“A lot of people work from home under the epidemic, and they don’t have to commute,” President McCleme told Bloomberg via video. And many people still believe that even after the epidemic, many companies do not require employees to go to work, so people will have more flexibility to work from home than in the past. “
President McCleme said he was not worried that Canada’s real estate market would spiral out of control. He said it reminded him of 2017, when house prices in big cities such as Toronto got out of control, sparking concerns and warnings about property speculation inside and outside the industry, forcing federal and provincial governments to take steps to cool the real estate market.
President McCleme said frankly: “so far, we have not seen the kind of overheating that we are really worried about in the real estate market.” The situation doesn’t look like 2017. “
He also said that last year, especially since the beginning of the epidemic, the market boom was not as concentrated in the metropolitan areas with higher housing prices as it was more than three years ago, but the national market was generally booming.
“so I think this in itself means that the active market and rising house prices are driven more by basic demand than by property speculation,” said President McCleme.
Although the epidemic has had a great impact on the economy, especially the labor market, real estate is still booming in 2020. Unprecedented demand for housing and the tightest housing supply in history pushed house prices across the country to record levels in December, with some of the biggest increases, often in suburbs or even rural areas a few hours’ drive from major urban centres.
In fact, the Bank of Canada has been watching and studying the evidence of rising house prices because people tend to bet on future returns on property investments, the so-called extrapolated price expectations. But so far, no similar evidence has been found.
“when people buy houses, the only reason we start to worry is that they think prices will only go up,” said President McCleme. These are the things we are looking at at the low end of the market. “
He said the central bank also found no evidence that low interest rates were creating some kind of loophole in the financial system, and that although they were monitoring the situation closely, they needed to change their policies.
He added: “We are aware of some risks here. We must be vigilant against this and avoid the accumulation of problems and the widening of loopholes. “