Canada watching housing markets 'very closely'

Ottawa

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.

Canadian home prices jumped 25 per cent in February from a year ago, with the average resale price hitting a record C$678,091 (S$726,041). Prices were up 9.1 per cent 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, adding that housing market activity is increasingly taking a front seat in discussions between Bank policymakers and their federal government counterparts.

Ms 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 must go through parliament and will require the support of at least one opposition party. REUTERS