We are quick to criticize government decisions that go awry, so it’s only fair to offer plaudits when elected officials and policymakers get it right on key files. Like, for instance, the cost of housing.
Several indicators suggest Canada’s insane upward spiral in home prices, driven largely by Vancouver and Toronto, has been arrested.
According to the Bank of Canada, prices likely peaked in early 2017; the international real-estate consultancy Knight Frank found that, whereas Canada’s annual price inflation was 10th in the world in the fourth quarter of 2017, it is now 15th.
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Multiple factors explain the slowdown, but it is unmistakably related to the implementation of foreign ownership taxes in British Columbia and Ontario, the tightening of mortgage eligibility and other changes to home-ownership rules by the Canada Mortgage and Housing Corporation, and rising mortgage rates.
With so much of Canadians’ wealth at risk, this is a policy success. But it has not solved every problem.
Bank of Canada Governor Stephen Poloz indicated on Thursday that, while house prices and personal-debt levels appear to have stabilized, he continues to believe overall indebtedness remains at worrying levels.