TORONTO — The federal government is creating a working group on housing with the Ontario and British Columbia governments as well as officials from Vancouver and Toronto amid warnings that housing prices in those cities are rising at an unsustainable pace.
Overall, the housing market is "sound," but pockets of risk have emerged since the financial crisis, Finance Minister Bill Morneau said in a speech Thursday.
The government has already taken steps to protect borrowers and lenders, Morneau said, but more steps can be taken, if warranted, to help maintain a stable housing market.
Finance Minister Bill Morneau speaks to the Economic Club of Canada in Toronto, on Thursday, June 23, 2016. (Photo: Eduardo Lima/CP)
"These measures are taking some time to take effect, but we do know that they will help," he said. "I want to say though, if further steps are warranted, further steps can be taken to protect both borrowers and lenders, helping to maintain a strong, stable and secure housing market and the economy over the long term."
Morneau recently increased the minimum down payment for homes over $500,000, a measure aimed specifically at cooling the Vancouver and Toronto markets.
The working group has not yet been formed — Morneau said he spoke to the respective finance ministers and mayors about it earlier this week — but it will meet through the summer to review factors that affect housing supply and demand, affordability and stability of the market.
"While the federal government does have some levers under its control, we don't have all of them," he said. "This, in our estimation, is a shared responsibility with provincial governments and municipalities having regulatory and taxation powers to respond to unique local concerns."
Our housing market working group will meet this summer to study the supply & demand for housing, affordability & stability in the market.
— Bill Morneau (@Bill_Morneau) June 23, 2016
The Bank of Canada has warned that housing prices in Vancouver and Toronto are rising at an unsustainable pace that is beyond local economic fundamentals.
It noted that year-over-year house price growth in the greater Vancouver area hit 30 per cent last month, up from 15 per cent in December. In Toronto, the report said prices increased 15 per cent, compared to 10 per cent six months ago.
The Toronto Real Estate Board has reported that the average price for a detached home in the city last month was $1.28 million, while the average price for all homes was $782,051.
The Real Estate Board of Greater Vancouver said that its benchmark price for detached properties has risen above $1.5 million.