Canada won't clamp down for now as housing prices rise

Mon Oct 28, 2013 1:42pm EDT
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By Louise Egan

OTTAWA (Reuters) - The Canadian government has no plans for now to clamp down on the housing market even though prices are rising again, Finance Minister Jim Flaherty said on Monday, but he pledged to investigate whether the price uptick looks to be more than temporary.

Flaherty said that it would be his department's responsibility to act on housing prices since the Bank of Canada has "basically no room to move," but added: "I have no intention of interfering in the market for the time being."

In its latest report last week, the central bank removed any reference to raising interest rates, saying the economy has too much slack and inflation is too low.

Flaherty, addressing reporters after meeting private-sector economists to get their views, also repeated his pledge to balance the 2015/16 fiscal-year budget, and said he would deliver "not a tiny surplus".

The minister has intervened in the mortgage market four times since 2008 to cool the housing sector, and had expressed some satisfaction that his moves had worked.

Some of the economists he met on Monday suggested that he have some more conversations with people in the building industry, Flaherty said, "because of what we're seeing in certain parts of the country, a reacceleration of housing prices."

"I do speak to people regularly in the business and I'm going to do more of it now because I want to ensure that this isn't just a temporary bubble," he said.

One theory put forward for the recent rise in housing prices is that people who perhaps should have been waiting to buy a house have been rushing to purchase to lock in low interest rates.   Continued...

An apartment block is pictured in downtown Vancouver, British Columbia June 20, 2011. REUTERS/Jason Lee