- Officials assessing implications of Vancouver, Toronto markets
- Housing will be ‘key issue’ for government, Morneau says
Canadian Finance Minister Bill Morneau said additional measures may be needed to manage the risks associated with the “highly charged” Vancouver and Toronto housing markets, even after British Columbia imposed a foreign buyer tax.
Speaking Tuesday in an interview in Hong Kong, Morneau identified housing as one of the “key” issues for his administration in coming weeks and months, and said policy makers are trying to assess the local and national “implications” of Canada’s two most expensive markets.
“We are going to remain on top of the dynamics in order to consider whether we need to take actions,” said Morneau, who took over as finance minister after Justin Trudeau’s Liberal Party won power last year. “That’s an area of focus to make sure we’re managing those risks in a way that protects Canadians.”
Canadian officials are trying to find ways to slow price gains in Vancouver and Toronto -- without harming other regional markets -- in a bid to control record household debt levels, make homes more affordable and ease chances of a crash.
In December, Morneau tightened mortgage requirements for homes worth more than C$500,000 ($388,000) to indirectly target those two markets. He has since sought to devolve some of the responsibility to the provinces and cities, with British Columbia’s move the first salvo in those efforts.
The province imposed a 15 percent tax on purchases by foreigners, beginning Aug. 2, and the most recent data suggest the levy disrupted the market that month, with the average price of a detached property declining 17 percent from July to C$1.47 million.
Still, Morneau said it’s not yet clear what impact the Vancouver tax will have on the market.
“I don’t yet have enough information to inform me as to whether it has had any short-term impact,’’ he said. “We need to keep considering the risk of the market and that means we’ll need to keep talking to B.C. and Vancouver.”
Bank of Canada Governor Stephen Poloz mirrored some of those same worries in his rate decision Wednesday.
Vulnerabilities associated with household imbalances are “elevated and continue to rise,” Poloz said Wednesday in a statement that accompanied his decision to leave interest rates unchanged. Poloz, who would risk exacerbating an economic downturn by raising rates to deal with inflated housing prices, has said other policy makers must take the lead in curbing excesses in the mortgage market.