The Governor of the Bank of Canada, Stephen Poloz, assured Canadians there is no risk of a U.S.-style housing crisis, despite record-high prices and sales.
The Canadian housing market has been bolstered by some of the lowest interest rates on record, but Poloz believes what we are seeing is "very different from what we saw in the United States just before the (2008 financial) crisis."
Speaking at a news conference following a speech that centred on the necessity of low interest rates in supporting an economy that is still in recovery, Poloz defended the policy against naysayers who warn that continued low rates could over-inflate the economy by fuelling debt levels.
“The consequences of an upside risk would be more manageable than those associated with a downside risk,” Poloz said, while also noting that the excess Canadian household debt levels will take two years to reach optimal levels.
Still, the housing situation is being watched closely by bears and bulls alike, especially in Toronto where condo sales continue to boom despite worries of an over-saturated market.
“Sales this past summer reaffirm that the new condo market in Toronto is on track for one if its best years on record, Shaun Hildebrand, senior vice president of Urbanation said. “There is still quite a bit of pent-up demand that came out of the slowdown last year.
“Should market confidence continue to hold in spite of the recent turmoil in financial markets, this sales momentum will carry into the final months of 2014 and early 2015.”