Canadian Housing Market Still Strong

Conditions in the Canadian housing market remain favourable with overall prices rising and few signs of excess supply, according to the Central Bank. Last month statistics showed the annual rise in new housing prices slowed to 5.2 per cent, its weakest pace since September 2005.


The recent deceleration in house prices has been most noticeable in certain markets, such as the energy-rich province of Alberta, which had seen steep price increases in the past two years.


Sheryl Kennedy, deputy governor of the Bank of Canada said,


“The moderation in activity and price increases that we have seen in recent months is both expected and welcomed.”


A declining trend in building permits also suggest that supply is adjusting to softening demand, while the mortgage market is in reasonably good shape. Canada has a conservative mortgage culture, but the deputy governor urged domestic lenders to apply consistent standards in both good times and bad.


Innovations in mortgages and home equity loans should not depend on an assumption of appreciating house prices, and they need to be transparent, so that market participants understand the risks they are taking.



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