Taking into account the vast differences between Canada’s regions, any government measures that aim to address the housing segment’s issues must suit the needs of particular markets rather than being national-level solutions like interest rate hikes, according to the chief official of the International Monetary Fund.
“That calls for, clearly, very, very specific policies,” IMF managing director Christine Lagarde stated in a Parliament Hill speech after meeting with Prime Minister Justin Trudeau, as quoted by The Globe and Mail
“I would suggest that macroprudential measures by the banks under the authority of the central bank is certainly one good avenue to explore in order to keep control over the housing markets and avoid excesses,” the IMF head added.
The statements came amid the federal government’s long-running search for solutions to the affordability crisis in Vancouver and Toronto, which have seen prices rapidly balloon to unprecedented heights—and thus placing them out of reach of most middle-class households—over the past few years.
“She is recognizing openly that traditional measures to cool housing – i.e. interest rate hikes – are really not an option at this point,” Bank of Montreal chief economist Doug Porter said. “It sounds very much like she is suggesting that lending standards could be tightened, under the broad guidance of the central bank.”
On Tuesday (September 13), Trudeau confirmed that he is continuously working with provincial and municipal officials to draft effective interventions to the overheated prices in Canada’s most active markets.
“One of the challenges people are facing in markets like Vancouver and Toronto is increasing home prices, and what we are looking at – in partnership with the provinces and the municipalities – are ways to ensure that Canadians are able to afford their homes,” Trudeau said, adding that he has granted an extra $444 million for the Canada Revenue Agency’s use in this year’s budget.
“One of the issues that we’ve highlighted recently is the need for continued enforcement of the tax code [to] make sure that we’re cracking down on people who are avoiding paying their fair share of taxes.”
Earlier this month, Finance Minister Bill Morneau reiterated that officials are considering all possible options in cooling down Canada’s hottest markets without stunting activity in other regions, amid the current environment of intensified price and household debt growth.
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