Ontario\u2019s Fair Housing Plan<\/a>, unveiled last week.<\/p>\nIn this scenario, the downturn in housing activity and prices would shave off a few percentage points from the national GDP over several years, Lascelles states.<\/p>\n
As it stands, the housing market generates roughly 15 per cent of the Canadian GDP, whereas 10 per cent would be \u201cnormal.\u201d<\/p>\n
Policymakers have been busy trying to tamp down what many observers agree is unsustainable growth in Canada\u2019s hottest housing markets.<\/p>\n
The Fair Housing Plan is a 16-point policy, largely meant to calm housing markets around southern Ontario, including the Greater Toronto Area\u2019s, the most active in the country.<\/p>\n
Greater Toronto Area home prices averaged $916,567 in March, up 33.2 per cent annually, according to the Toronto Real Estate Board, a consistent opponent of intervention to curb demand.<\/p>\n
Major steps set to impact the GTA market include the introduction of a Vancouver-esque foreign-buyer tax and a province-wide expansion of rent control.<\/p>\n
These measures follow mortgage tightening last year from the federal government.<\/p>\n
\u201cHowever, regulators have made many efforts in the past and never managed to permanently slow Canada\u2019s freight train of a housing market,\u201d notes Lascelles.<\/p>\n
Given this, and assuming interest rates stay low and unemployment rates decline, Lascelles says there\u2019s a 30-per-cent chance \u201cthis boom continues\u201d in Canadian real estate.<\/p>\n
Then there\u2019s the third choice: poor affordability and surprisingly effective government policy pulldown home prices \u201cfairly far.\u201d<\/p>\n
Lascelles pegs the likelihood of this happen at 30 per cent as well and says \u201cthis would unleash a period of quite weak economic activity in Canada.\u201d<\/p>\n
Of course, Lascelles doesn\u2019t claim to have a crystal ball. \u201cLet us confess that forecasting housing has all the precision of handling a slippery eel,\u201d he admits.<\/p>\n
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