The statement echoed a report by the Organisation for Economic Co-operation and Development earlier this year, which noted that Toronto housing and Vancouver real estate are at risk of a sharp decline.
Several observers agreed that Canada’s housing markets are poised for another bust not unlike the Greater Toronto real estate crash around two decades ago. Between 1989 and 1996, prices in the region went down by as much as half.
Other quarters allayed these concerns by saying that the 1989 bust came at the heels of record interest rates and soaring unemployment precipitated by unrelenting inflation and a major recession – conditions, they said, that are not present today.
“We don’t see the same cocktail – in any way – of factors that we saw back in the early 1990s,” Altus Group chief economist Peter Norman told Business News Network
Among the most enduring effects of the crash, experts said, is a now-universal feature in the Canadian housing market that allows first-time home buyers to borrow money from their Registered Retirement Savings Plans.
Observers warned, however, that this period of relative calm could end if the Bank of Canada puts in place drastic measures in response to inflation.
“When you chase inflation you overshoot and you kill the economy,” CIBC economist Benjamin Tal told Business News Network
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The Canada Mortgage and Housing Corporation said last month that the Toronto, Regina, Saskatoon, and Winnipeg markets were showing signs of “problematic conditions”.