One industry veteran cautions the government to consider the wide-reaching ramifications of attempting to temper rising prices, amid growing calls for it to do so.
“Complex markets, like the Canadian areal estate market, are difficult to intervene and tinker with,” Chris Whyte, Home Trust
’s newly appointed COO, told MortgageBrokerNews.ca. "I would be a bit concerned about how effective any attempt to curb the market could be.
“I’ve yet to see any market [outside Canada] that has intervened in a way that has satisfied all parties.”
Whyte’s comment was in response to BMO Economist Sal Guatieri’s suggestion that investment speculators – along with foreign investors – are a major driving force behind inflated home prices in Toronto and Vancouver.
And that the government should step in to manage that influence.
“The sooner that governments can provide a clearer picture of how much speculative investment is driving these price moves and take meaningful action to curb the excesses, the better the chance of avoiding a messy outcome,” Guatieri said in a recent research note.
Whyte, however, notes speculative investment is a natural result of solid housing markets.
“Just logically, any market that’s rising quickly attracts investors. If you’re seeing a market where things are increasing 5-10-15-20%, people want to participate in that,” he said. “I think the issue around the market in Canada is more complex than people want to give credit to.
“Is investment part of it? Sure.”
He also noted that recent government intervention may have had little impact on the overall housing industry.
“I think there are some things you can do around the edges; CMHC has done that, the government has done that,” Whyte said. “Whether or not those are ultimately effective, I’m not sure. Some say they didn’t intervene enough.
“I think more intrusive interventions [could have a negative impact].”