Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Canada's housing price surge increasing vulnerabilities: BoC

Economic IndicatorsApr 09, 2021 02:40PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: A sign is pictured outside the Bank of Canada building in Ottawa

By Julie Gordon

OTTAWA (Reuters) - Canada's red-hot housing market has bolstered the economic recovery from the COVID-19 pandemic, but the market imbalances are escalating and driving up already-high household debt, the Bank of Canada said on Friday.

Housing prices in Canada have surged over the last year, with the Bank of Canada becoming increasingly concerned in recent months that gains are being driven by excessive exuberance, investor activity and a fear-of-missing-out.

"Strength in the housing market is contributing to Canada's economic recovery from the pandemic. But it may also be intensifying housing market imbalances and household indebtedness," the Bank of Canada analytical note said.

"The evidence presented here generally suggests these vulnerabilities have increased in recent months."

The report, released Friday morning, shows that since the onset of the pandemic, outstanding household debt has risen by close to 3.5%, reflecting a surge in mortgage debt.

New mortgages to highly-indebted households are also rising sharply, the report shows.

Home price growth, meanwhile, has accelerated and is nearing the last peak in April 2017. The Bank also said some measures show rising exuberance in Toronto's housing market.

Canada's financial regulator said on Thursday it plans to tighten its mortgage stress test amid concerns about surging home prices, and to gird against risks when interest rates rise from record-low levels.

The average selling price of a Canadian home jumped 25% in February, hitting a record C$678,091 ($540,096), according to the Canadian Real Estate Association.

Governor Tiff Macklem said late last month that the central bank was seeing signs of household indebtedness worsening as housing prices soared.

($1 = 1.2555 Canadian dollars)

Canada's housing price surge increasing vulnerabilities: BoC
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email