Canada's finance minister says she is monitoring housing markets very closely

Julie Gordon
·2 min read
FILE PHOTO: A row of houses stand in a subdivision in East Gwillimbury, Ontario

By Julie Gordon

OTTAWA (Reuters) -Canada's federal government is watching the country's red-hot housing market "very closely" and is aware that rising prices make it more difficult for many young Canadians to buy a home, Finance Minister Chrystia Freeland said on Thursday.

"We are of course watching housing markets across the country very, very closely and carefully," she told reporters in a news conference.

"We are very aware also of the challenges that many Canadians face - particularly young Canadians - in buying a home," she said. "So it's something that we're looking at carefully."

Canadian home prices jumped 25% in February from a year ago, with the average resale price hitting a record C$678,091 ($537,698). Prices were up 9.1% from January.

Canada's national housing agency separately warned on Thursday that there was evidence of overheating on a national level in housing and said there was "a high degree of vulnerability" in housing markets in five cities, including Toronto and Ottawa.

"Canada's national housing market remains moderately vulnerable, with more pronounced vulnerabilities in large cities and smaller centres," the Canada Mortgage and Housing Corporation said in its latest housing market assessment.

While the eye-watering price gains are prompting calls for action, policymakers have so far been unwilling to intervene for fear of undermining Canada's still-fragile economic recovery from the COVID-19 pandemic.

Bank of Canada Deputy Governor Toni Gravelle told Reuters earlier this week that the central bank is seeing signs of increased investor activity in the market and is concerned "fear of missing out" may also be driving gains.

Gravelle also said housing market activity is increasingly taking a front seat in discussions between Bank policymakers and their federal government counterparts.

Freeland on Thursday also announced that the government had presented new legislation to provide C$7.2 billion in "critical support" to provinces, territories and other entities.

The bill, which must go through parliament and will require the support of at least one opposition party, includes C$4 billion ($3.17 billion) in transfers to provinces and territories for immediate healthcare needs, C$1 billion toward vaccination plans, and up to C$2.2 billion in infrastructure money.

($1 = 1.2618 Canadian dollars)

(Reporting by Julie Gordon and Steve Scherer in OttawaEditing by Marguerita Choy and Matthew Lewis)