TORONTO, Jan 26 (Reuters) - Royal Bank of Canada on Thursday warned that policymakers are more likely to introduce measures to cool the Toronto housing market after home sales hit a record high in 2016.
“The likelihood of policy intervention to address housing risks in Toronto is increasing,” economists at Canada’s biggest bank said in its January Canadian Housing Health Check.
RBC did not specify whether further moves would be introduced by the federal government, the provincial government in Ontario or Canada’s financial regulator.
Canada’s finance ministry last year implemented stricter rules for mortgage providers while the provincial government in British Columbia slapped a 15 percent tax on foreign buyers to help bring prices down in the sky-high Vancouver market and make prices more affordable for ordinary people.
The Vancouver housing market has slowed since the foreign tax was introduced although economists are divided about the extent to which that is the result of the tax. Ontario has played down the chances of implementing a similar tax but not entirely ruled it out.
RBC said in a report that prices have continued to accelerate in Toronto particularly for single-family detached homes, which are in short supply.
It said poor and rapidly eroding affordability is a main source of concern and “the likelihood of policy intervention to address housing risks in Toronto is increasing”.
“Ongoing concerns about housing affordability, government exposure to housing, and stability of hot housing markets and the financial system keep the odds of further policy intervention elevated,” the bank said. (Reporting by Matt Scuffham; Editing by David Gregorio)