inflated into an affordability crisis, turning the issue of housing into a subject of critical political discussion.
However, according to the House Price Exuberance Indicator published by the Bank of Canada, demand and supply in the residential property market in the largely dense and ethnically diverse city. Instead the central bank’s analysis shows that it is the authorities in the provinces of Quebec and Ontario that should be concerned regarding a potential housing bust.
According to the Bank of Canada’s bi-annual review of the financial system, as troubling sources of house-price inflation detected in late 2000s, following the Great Recession, continue to exhibit signs of “exuberance”, the Greater Toronto Area is expected to catch up with Vancouver, as will Ottawa and Hamilton. However, the city facing the biggest risk of a downturn was identified to Montreal, as its square moved to a darker shade on the central bank’s heat map, during the third quarter of this year.
According to Paul Beaudry, a deputy governor of the BoC, the fear of missions out, or the expectation of making future capital gain from reselling are what cause extrapolative price pressures. “The good news is that the somewhat slower house price growth that we saw over the summer should lower the chances of undesirable extrapolative price dynamics. But some markets still show signs of such expectations,” he said in a speech on Tuesday (24 Nov).
