VANCOUVER (NEWS 1130) – The Bank of Canada is warning about ‘financial vulnerabilities’ in our housing market.
In the bank’s quarterly Monetary Policy Report, it states, “sharply rising prices in these markets over the past year raise the possibility that prices are also being driven by self-reinforcing expectations, making them more sensitive to an adverse shock.”
Adding to this, the Governor of the Bank of Canada, Stephen Poloz, says “prices appear to be outpacing anything you could write down as fundamental.”
Financial adviser Hilliard MacBeth has written a book, When the Bubble Bursts: Surviving the Canadian Real Estate Crash, and says those thinking about getting into the housing market are better off staying on the sidelines given this situation.
“It’s the worst time to try and buy a house,” says MacBeth. “You’ve got all these buyers desperate to get in before the prices rise even higher, and you’ve got these sellers who are reluctant to sell and maybe pulling their houses off the market for a while to see how high the prices will go.”
Scotiabank economists are also weighing in, suggesting rate cuts by the central bank have previously fuelled what it calls “housing excess.”