Photo: Wanda Gould/Flickr
Canada’s banks are getting bearish.
Not long after BMO Chief Economist Doug Porter warned Toronto real estate was in a bubble, Scotiabank’s president and CEO has suggested the city’s housing market is headed for a correction alongside Vancouver’s.
“We’re concerned from the perspective that trees don’t grow through the sky, and markets will correct at some stage here,” said Brian Porter, president and CEO, in a conference call this morning.
Porter voiced support for recent mortgage rule changes Canadian Finance Minister Bill Morteau announced late last year.
“I think we’re going to need some time to see those [changes] take hold and we’ll see that see through the spring mortgage season,” Scotiabank’s Porter said.
More than half of Scotiabank’s mortgage book is insured, he noted. “We’ve reduced tail risk in our portfolio,” he added.
Porter brought up a number of factors influencing Canadian home prices.
“There’s population growth, immigration, there’s the time that it takes to develop a property in terms of getting through the government processes — all those different types of things here, so this is a complicated issue,” he explained.
While national prices were relatively flat in January from year-ago levels, the average selling price in the Greater Toronto Area, Canada’s most active market, was $770,745, representing a 22.3-per-cent year-over-year increase, according to the local real estate board.
Like the Scotiabank CEO, Bob Finnigan, who is president of the Canadian Home Builders’ Association, a residential construction industry lobby group, recently noted how development timelines are contributing to residential real estate price gains.
“If the lands we’re allowed to build on can be built on sooner, that could affect supply,” Finnigan said on BuzzTV, BuzzBuzzNews’ weekly Facebook Live broadcast.
“It’s my hope [that] would just stop the rapid increase in pricing, because that’s a direct result of supply and demand,” he added, speaking to the GTA market in particular.
Watch the full BuzzTV interview with Finnigan below: