Warnings of dangerous overheating in Vancouver and Toronto’s real estate markets are mounting, but home prices in those two cities are unlikely to decelerate on their own anytime soon, according to a BMO analysis released June 15 and reported by REW.ca’s sister publication Business in Vancouver.
BMO economists Doug Porter and Robert Kavcic concluded that any new government policies to cool down the housing market should be directed towards reigning in “foreign investment, speculation and land restrictions, in that order.”
Porter and Kavcic pinpoint several factors behind nosebleed-level price accelerations concentrated in those two Canadian cities. A demographic surge of young people aged 25-40 (prime homebuying years) combined with the reluctance of baby boomers to downsize means there is a lot of pressure being placed on the detached home market.
The analysis contrasts with a report by the Bank of Canada governor Stephen Poloz issued last week, which warned that the risk of a housing market downturn in Vancouver and Toronto was increasing.
To read the full Business in Vancouver article on the BMO statement, click here.