Calls for finance minister to cool the market

A bank has already urged the new finance head to rein in the housing market, and one broker – perhaps surprisingly – thinks it may not be such a bad idea

Calls for finance minister to cool the market
Cooling the housing market may be a good plan, according to one broker, as long as the government focuses on reining in this one type of buyer.

“I would say cooling the market sounds like a good plan, but how they cool it is the main question; in our area – it’s foreign money that is coming in and inflating prices,” Jeff Evans, a broker with Mortgage Architects Canada Innovative Financial in B.C., told “If the government were to do something to cool that segment, I would support it; if the measures make it harder for the average Canadian to buy, I wouldn’t support that.”

Debate around whether or not the new finance minister, Bill Morneau, should take measures to cool the housing market has already begun. One leading bank kicked off the discussion last week.

“I don’t like the recent trends in housing,” HSBC Chief Economist David Watt said, according to the Globe and Mail. “In our view, there is a strong case for further macro-prudential measures to manage potential risks to economic growth and financial stability from the housing sector.”

Some are suggesting Watt’s comments are meant to encourage Morneau to take a page out of the late Jim Flaherty’s playbook by implementing measures that will cool the housing market.

Those measures included lowering the maximum amortization limit and implementing a host of restrictions for conventional mortgages through B20. Measures that made it harder for the average Canadian to purchase a home.

That kind of policy would likely not be welcomed by the vast majority of brokers.

“The government should make it easier and not harder for Canadians to buy,” Evans said.
It remains to be seen how Finance Minister Morneau plans to oversee the housing market; neither he nor Prime Minister Justin Trudeau have commented on what policy they will take.