Reblogged from Canadian press, Julian Beltrame
OTTAWA — Canada’s housing market is not in a bubble and not likely to suffer a sudden and sharp correction in prices unless there is another major global shock to the economy, Bank of Canada governor Stephen Poloz said this week.
The central banker, testifying before the Senate banking committee on his latest economic outlook Wednesday, said he believes the most likely scenario is a soft landing where home prices stabilize, although he acknowledged that an imbalance in the market and high household debt remain key risks.
Poloz used the testimony to pointedly disagree with a couple of forecasting organizations that weighed in this week on the Canadian situation — the Fitch Rating service that judged Canada’s housing market as 21% overpriced, and an OECD recommendation that he start raising interest rates in a year’s time.
“Our judgment is (the housing market) is a situation that is improving, this is not a bubble that exists here that would have to be corrected,” he said. “If there is a disturbance from outside our country that’s another analysis.”
Poloz said most of the fundamentals surrounding the housing market appear headed in the right direction. The prospects for the economy is improving, he noted, which should create more jobs.
As well, he said banks are now demanding higher credit scores from new borrowers and added that he does not believe there has been serious overbuilding in the housing market.
- Poloz says housing market not a bubble (globalnews.ca)
- Canadian real estate market is not in a bubble, Poloz says (vancouversun.com)
- BoC chief Stephen Poloz says Canadian housing market not a bubble, predicts soft landing (business.financialpost.com)
- Poloz says Canadian Housing Market not a Bubble (theepochtimes.com)
- Poloz says Canadian housing market not a bubble, predicts soft landing (macleans.ca)