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Bank of Canada head calls Toronto home prices unsustainable

June 8th, 2016  |  Home

The head of Canada’s central bank has issued a grave statement on Vancouver and Toronto’s real estate markets, adding one more of Canada’s foremost authorities on the economy to the chorus of experts who are concerned about the country’s hottest housing markets.

Stephen Poloz warned homebuyers that they should not expect the steady price growth and frantically competitive market to last in Toronto and Vancouver due to “underlying fundamentals”.

According to the Toronto Star, the statement tells prospective homeowners that they shouldn’t get trapped in crazy bidding wars and pay tens or hundreds of thousands of dollars over list price for their homes expecting that the value growth will make up for it in a few years.

Just the day before, Canada’s Finance Minister Bill Morneau released a statement informing Canadians that the federal government is examining the country’s real estate markets in order to determine if we need more safeguards to ensure people can still afford housing if rates go up or some other event impacts affordability.

With debt levels at the highest they’ve ever been, concern is high that we’re just one bad day away from a financial crisis burying millions of Canadians under the weight of their loans.

Poloz’s statement directly addresses the traditional sentiment in Canada that home ownership is the smartest and most foolproof investment available.