http://www.digitaljournal.com/news/world/canada-s-housing-market-continues-to-strengthen/article/417980

Canada’s housing market continues to strengthen

Posted Nov 29, 2014 by Simon Crompton
As concern grows over the amount of capital that banks are holding to use for mortgage lending, Canadian financial officials want to monitor the situation to watch for signs of a real estate bubble occurring.
A view of Calgary at night
A view of Calgary at night
Via Flickr user davebloggs007
Although the current Finance Minister Joe Oliver does not foresee a bubble developing, he has said that he will monitor pricing of Canadian real estate “very carefully.” These remarks came in reaction to both the International Monetary Fund (IMF) and the Canada Mortgage & Housing Corporation (CMHC), Canada’s national housing agency, claiming that there were “pockets of overvaluation in the market.”
Mr. Oliver told the Wall Street Journal, “The International Monetary Fund in its annual review of Canada said that it doesn’t believe that there’s a real estate bubble [here].” He also noted that the government had taken steps, under his predecessor Jim Flaherty and himself, to maintain realistic pricing in the housing market.
By practicing prudent lending practices and tighter regulations in the housing market, Canada avoided the devastation of a U.S. style housing bubble. Years of low interest rates have been driving the price of real estate in Canada higher. This has caused some economists to believe that the market is risking a bubble, while others claim that the government regulation has worked to keep the housing prices from getting out of hand.
For the last year, in response to inflated prices in some areas, Canadian policy makers have been attempting to slow down the growth in the housing market. Low interest rates and the end of the recession in 2013 have prompted a strengthening of the real estate market. That trend is in keeping with the rest of the world. Housing markets in India have shown a similarly robust growth. This largely been drive by new projects in Ghaziabad.
“The continued strength of housing prices across many Canadian cities in the second half of 2013 is undeniable,” said Julie Dickson, head of the Ottawa-based Office of the Superintendent of Financial Institutions (OSFI) to Bloomberg. “All of us have a responsibility and an interest in ensuring that prudent lending is occurring.”
The CMHC is the main supplier of mortgage insurance in Canada and Mr. Oliver has said that CMHC will be used to reduce taxpayer exposure to the housing market, but there are no current plans to do so.
“We do not believe that the current situation merits any major moves,” said Mr. Oliver.