A robust housing sector would be most beneficial to the Canadian economy
The International Monetary Fund strongly urged the Canadian government at all levels to take more decisive steps to protect the nation’s housing market from a possible correction, as such an eventuality carries grave risks to the Canadian economy as a whole.
In the preliminary findings of its annual review of the Canadian economy, the IMF said last week that a further tightening of macro-prudential and tax-based measures to mitigate speculative and investment activity should be considered.
The organization also called for closer coordination between federal and provincial regulators as well as government efforts to collect more comprehensive data on real estate transactions, The Canadian Press reported.
The housing market and high levels of household debt are often pointed to as areas of concern for the Canadian economy.
Ottawa has moved several times in recent years to tighten mortgage lending rules including expanded stress tests on mortgages.
A foreign buyer tax of 15 per cent was also implemented in the Vancouver region last summer, while Ontario recently announced plans for a similar levy for the Greater Toronto Area. The IMF encouraged B.C. and Ontario to replace their foreign buyer taxes.
Cheng Hoon Lim, the IMF’s mission chief for Canada, said there are a few policies that could help deter speculation in the housing market and alleviate concerns about rising debt burdens.
“Among these measures, a cap on household debt to income or more stringent qualification criteria for household debt above a certain threshold will go directly to addressing household indebtedness,” she said.
Moody’s Investors Service recently downgraded Canada’s six big banks amid concerns about consumer debt and housing prices that could leave them vulnerable.
Recently, the new CEO of the Canadian Bankers Association said that policy-makers should take time to ensure there are no unintended consequences stemming from efforts to rein in Toronto’s runaway housing prices before introducing further measures.
Neil Parmenter said he’s encouraged that the federal, provincial and municipal levels of government are working together on housing policy. But he urged regulators and politicians to assess what effects recent rule changes are having before bringing in new policies.
“Sometimes it’s healthy to have a bit of a pause and see what the impacts are and then adjust as necessary,” Parmenter said earlier this month.
Related stories:
CMHC releases quarterly report
Commentary: Canada in an advanced stage of real estate dependency
In the preliminary findings of its annual review of the Canadian economy, the IMF said last week that a further tightening of macro-prudential and tax-based measures to mitigate speculative and investment activity should be considered.
The organization also called for closer coordination between federal and provincial regulators as well as government efforts to collect more comprehensive data on real estate transactions, The Canadian Press reported.
The housing market and high levels of household debt are often pointed to as areas of concern for the Canadian economy.
Ottawa has moved several times in recent years to tighten mortgage lending rules including expanded stress tests on mortgages.
A foreign buyer tax of 15 per cent was also implemented in the Vancouver region last summer, while Ontario recently announced plans for a similar levy for the Greater Toronto Area. The IMF encouraged B.C. and Ontario to replace their foreign buyer taxes.
Cheng Hoon Lim, the IMF’s mission chief for Canada, said there are a few policies that could help deter speculation in the housing market and alleviate concerns about rising debt burdens.
“Among these measures, a cap on household debt to income or more stringent qualification criteria for household debt above a certain threshold will go directly to addressing household indebtedness,” she said.
Moody’s Investors Service recently downgraded Canada’s six big banks amid concerns about consumer debt and housing prices that could leave them vulnerable.
Recently, the new CEO of the Canadian Bankers Association said that policy-makers should take time to ensure there are no unintended consequences stemming from efforts to rein in Toronto’s runaway housing prices before introducing further measures.
Neil Parmenter said he’s encouraged that the federal, provincial and municipal levels of government are working together on housing policy. But he urged regulators and politicians to assess what effects recent rule changes are having before bringing in new policies.
“Sometimes it’s healthy to have a bit of a pause and see what the impacts are and then adjust as necessary,” Parmenter said earlier this month.
Related stories:
CMHC releases quarterly report
Commentary: Canada in an advanced stage of real estate dependency
