As reported by Alexandra Posadzki of The Canadian Press
, the OECD warned that any housing market correction in Vancouver or Toronto would pose extreme danger to the stability of the Canadian financial system.
Measures introduced by Finance Minister Bill Morneau last year, which took into effect back in February, now compel borrowers to make a 10 per cent down payment on homes worth more than $500,000, up to $1 million.
Despite these regulatory changes, however, low interest rates have continued to inflame the housing markets in the two cities.
“Obviously it’s not helping, especially not in Toronto and Vancouver,” CIBC deputy chief economist Benjamin Tal said, adding that the new rules had little effect because they do not encompass the entire sector.
“Most of the changes were made to the insured segment of the market, but a lot of the activity that is happening, especially over $1 million, is in the non-insured segment of the market,” Tal explained.
Recent CREA numbers revealed that average home prices have grown sharply on a year-over-year basis in April, rising by over 12 per cent in Toronto and by more than 25 per cent in Vancouver.
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In its economic outlook report released earlier this week, the Organization for Economic Co-operation and Development (OECD) urged the Canadian federal government to decisively intervene in reducing the risks posed by non-stop price growth and near-insurmountable household debt in the country’s hottest markets.