Finance Minister Jim Flaherty says he will step in to intervene once more if the housing market appears to move toward a bubble.
"I'm comfortable with where we are, but we have to watch and, if we see anything moving toward a bubble, we can intervene," Flaherty said in an interview with BNN Television this week. "It's calming, which is good, especially the condo market, which was quite worrisome in Vancouver and Toronto, and a little bit in Montreal also," he continued.
Home sales rose across Canada for August year-over-year – bolstered in large part by significant jumps in Canada’s two largest housing markets.
Ontario reported a 10.6 per cent uptick in August sales, year-over-year and an average price increase of 5.7 per cent.
Not to be outshone, British Columbia reported a 28.6 per cent increase in sales activity and an 8.6 per cent jump in average prices.
The heated market is due, in large part, to the increase in fixed-mortgage rates after a period when they were at record lows. Fence-sitters who have been keeping rate-holds in their back pockets have decided to pounce on the market before rates increase even further. Speculation also abounds that they will continue to do so, leading some brokers to believe clients will suffer from sticker shock.
“(I’m concerned about) people getting used to lower rates; as rates normalize again there will be a shock for clients,” Terry Kilakos of Verico North East Mortgage told MortgageBrokerNews.ca.
The market is expected to cool as rates continue to increase and the rate-holds that were locked in during the period of sub-3 per cent rates expire. That kind of movement may be enough to encourage Flaherty not intervene once more.