“Trees don’t grow to the sky and markets will correct at some stage here,” Brian Porter, Scotiabank CEO said during the company’s most recent earnings call.
Scotia’s commentary comes mere days after both RBC and BMO made their own concerns known.
“You’re seeing 20 per cent house price growth in a market where you shouldn’t see that much,” Dave McKay, the chief executive of Royal Bank of Canada, recently told the Financial Post. “That’s concerning. That’s not sustainable. Therefore, I do believe we are now at a point where we need to consider similar types of measures that we saw in Vancouver.”
Vancouver, of course, made headlines last year when it announced a 15% tax on foreign homebuyers – a move that was met with equal parts derision and support from industry players.
The move is thought to have played a role in dampening Vancouver’s hot housing market, and a similar one could have a similar effect in Toronto, depending on how much influence foreign buyers actually have on propping up prices (no rock solid data yet exists).
The Bank of Montreal was the first – this time around, at least -- to suggest Toronto’s housing market may be blazing out of control.
“Let’s drop the pretence. The Toronto housing market—and the many cities surrounding it—are in a housing bubble,” Doug Porter, chief economist for BMO Bank said in a recent report. “Everyone may have a slightly different definition of what a bubble is, but most can agree it’s when prices become dangerously detached from economic fundamentals and start rising strongly simply because people believe they will keep rising strongly, encouraging more buying.”
According to the Toronto Real Estate Board, the average Toronto house cost $770,745 in January – up from $630,193 in January 2016.
Vancouver, meanwhile, saw its average home price fall 18.9% year-over-year to $878,242 in January, leading some to suggest the western market is already in the midst of a correction.
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Add Scotiabank to the group of big banks concerned about a potential housing correction in Canada’s most expensive market.