March 15, 2010 / 6:04 PM / in 8 years

Canada's housing market on right path: Flaherty

NEW YORK (Reuters) - Canadian Finance Minister Jim Flaherty welcomed news on Monday of slower existing home sales, which takes some steam out of speculation about a housing bubble in the country.

“I think we’re going in the right direction,” Flaherty told Reuters, referring to a report that showed sales of existing homes in Canada dipped for a second straight month in February.

Speaking after an address to the Canadian Association in New York, Flaherty said there is no evidence of a housing bubble, a suggestion made by some economists due to a sharp rebound in sales and prices as the economy pulls out of recession.

He said developers have told him they are still seeing strong demand, and that he expects strong demand for new homes this spring.

Flaherty is visiting New York and London this week to talk up the Conservative government’s latest budget in the hopes of encouraging more foreign investment.

Despite Ottawa’s record budget deficit -- estimated at nearly C$54 billion ($53 billion) in the year to March 31 -- Flaherty has vowed to curb spending to largely close that gap by 2014-15.

At that time, the debt-to-GDP ratio will be 31 percent, he said, versus 67 percent in the United States, 75 percent in the United Kingdom and 115 percent in Japan.

“It gives us a competitive advantage,” he said in his speech.

Proof of that, he said, was the “overwhelming demand” for two recent bond sales, in euros and dollars. Proceeds from those sales were used to diversify foreign exchange holdings and not for government spending.

With a banking system that proved resilient through the global financial crisis, the Canadian government has been reluctant to embrace proposals for a global bank tax or other international measures to restrict banking activities aimed at preventing future crises.

Canadian officials argue that a global bank tax is not needed if countries have proper regulatory controls on capital and debt levels.

“We’re in favor of limiting leverage,” Flaherty said.

($1=$1.02 Canadian)

Reporting by Walden Siew; writing by Ka Yan Ng in Toronto; editing by Rob Wilson

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