Canada’s finance minister says the country’s real estate market has avoided the so-called bubble, with many markets already experiencing a soft landing.
Speaking at a private event on Wednesday, Finance Minister Joe Oliver said the government isn’t expected to change any guidelines in an effort to cool off the few hot markets remaining.
“We do not see the need for major changes at this time,” Oliver said at the event, according to Bloomberg News. “We will continue to monitor the market and make adjustments, if needed, although none are being actively considered right now.”
The Canadian government has changed lending guidelines four times since 2008, when real estate sales and prices started to rise. While those increases are still being realized in many markets – specifically Toronto, where April home sales rose 17 per cent from the year-ago period, and in Vancouver, where sales were up 37.7 per cent year-over-year in April. Still, Oliver said some regions are already seeing slowdown.
Regardless, analysts both in Canada and internationally have called the market overvalued. Most recently, ratings agency Fitch called the market overvalued by 25 per cent, while other firms have published overvaluation figures between 10 and 60 per cent.
Oliver isn’t alone in his predictions. Speaking to the House of Commons Standing Committee on Finance, Stephen Poloz, the governor of the Bank of Canada, also suggested the country is not in danger of a hard landing.
“There are many other characteristics of a bubble situation that are not present,” said Stephen Poloz, the governor of the Bank of Canada, pointing to highly speculative behaviour – for instance, people buying multiple properties with the sole intent of selling them at a profit in the future.
Instead, the trend seems to be that first-timer buyers – more so than would-be investors – are taking advantage of low interest rates. Oliver said those interest rates, paired with economic growth in major centres, will continue to buoy the market, while hyperactive cities like Toronto and Vancouver will continue on their own trajectories.