Friday, October 31st9.3°C
21625
23883

Ottawa meddling, not high prices is main threat to Canadian housing: report

OTTAWA - A new report into Canada's hot housing market is trying to calm fears of a coming collapse in prices, saying the biggest threat to home valuations may be government meddling with mortgage rules.

The paper by economist Will Dunning, who runs a real estate market research firm in Toronto, says Canadians have been mostly prudent investors in housing and that the market can absorb either higher prices or a one-per-cent hike in interest rates.

Rather than being over-valued, house prices in Canada are fairly valued and may even be undervalued, he says.

The paper was released on the same day a new Teranet-National Bank composite price index rose to a new all-time high, showing home prices rose 0.3 per cent in February.

The Bank of Canada and the federal government have warned about an over-heated housing market for several years, arguing that once interest rates start rising, the roof will cave in for some home buyers.

The Organization for Economic Co-operation and Development (OECD) has also pointed to Canada as having the world's most over-valued housing market.

But Dunning says the OECD has been using flawed comparison between cost of owning and the cost of renting homes.

Dunning says the federal government, which has intervened four times in recent years to suppress higher-risk home buyers by changing mortgage rules, poses a real threat to the market.

The latest effort in July 2012 to slow the market had an impact equivalent to a one per cent increase in mortgage rates, he says, and has succeeded in reducing demand.

That, rather than over-valuations, is the main reason house prices could fall, he says.

The Canadian Press


Read more Business News

22625


Recent Trending




Today's Market
S&P TSX14613.32+154.63
S&P CDNX769.59-2.06
DJIA17390.52195.10
Nasdaq4630.742+64.604
S&P 5002018.05+23.40
CDN Dollar0.88750.00
Gold1166.30-32.2999
Oil80.55-0.35
Lumber325.70+2.10
Natural Gas3.715+0.066

 
Okanagan Companies
Pacific Safety0.125+0.015
Knighthawk0.01-0.005
QHR Technologies Inc1.18+0.03
Cantex0.045-0.015
Anavex Life Sciences0.185+0.0139
Metalex Ventures0.03-0.005
Russel Metals32.85+0.63
Copper Mountain Mining2.09+0.12
Colorado Resources0.125-0.015
ReliaBrand Inc0.015+0.003
Sunrise Resources Ltd0.05+0.025
Mission Ready Services0.39+0.015

 



23015

FEATURED Property
2097318200 - 710 Rutland Road
2 bedrooms 2 baths
$209,000
more details
image2image2image2
Click here to feature your property
Please wait... loading


Empty nesting: financial issues

Now that the children have ‘left the nest’, it is a good time to step back and take stock of your financial situation. Being on your own will probably cut household costs to some extent, b...


Keep your haunted home safe

Eerie sounds, spooky lights and Jack-o’-lanterns aglow—extra efforts at Halloween will keep visitors coming back for both tricks and treats. However, to keep the fun going, it’s imp...


What I learned in China

Photo: ContributedI will never be an expert on China. It is just too big, too complex and too old with layers of history and meaning that would take several lifetimes to unravel. As I said to my hosts...

_








Member of BC Press Council


22771