Once again, Finance Minister Jim Flaherty has stoked the industry’s fears by stating that the Canadian government is willing to intervene if the housing market is viewed as a threat to the Canadian economy.
“We have to watch out for bubbles – always – in markets around the world, including our own Canadian residential real estate market, which I keep a sharp eye on,” Flaherty said in a Q&A session at Tuesday’s fall economic and fiscal update in Edmonton. “I’ve intervened four times in the last several years, and I’ll intervene again if I have to make sure we don't create a housing bubble."
The market has bounced back following Flaherty’s latest bid to slow mortgage spending – which included shortening the maximum amortization period -- as homebuyers adjusted to the new rules.
The Canadian Real Estate Association (CREA) released its latest figures in mid-October and intimated a belief that the markets will slow to the end of the year.
“While the momentum for sales activity began improving a few months ago, it may be losing steam after having only just climbed back in line with an average of the past 10 years,” Gregory Klump, CREA’s Chief Economist said in the organization’s latest report. “Even so, one can see large year-on-year changes when comparing activity to a month like September 2012, when sales dropped to the lowest level for that month in more than a decade.”
However, it remains to be seen how markets will fair in 2014 and with CREA readying to release its latest figures, we may have a much better indication of what to expect; which, of course, will provide a better idea as to whether or not Flaherty may see it fit to intervene once again.