Bloomberg News

IMF Says Canada May Need More Measures to Slow Housing Market

October 05, 2011

Oct. 5 (Bloomberg) -- Canadian policy makers may need to consider additional measures to slow the country’s housing market if households continue to take on more debt, the International Monetary Fund said in a report today.

The Washington-based organization said Canada’s labor and housing markets have performed “relatively well” and credit growth remains strong as the economy benefits from low interest rates and a profitable banking sector.

“Developments on the housing front require increased vigilance, and consideration may need to be given to additional prudential measures to prevent a further buildup in household debt,” the Fund said in the report.

Finance Minister Jim Flaherty tightened mortgage rules earlier this year as households took advantage of historically low interest rates to take on mortgage debt. Household debt as a share of personal disposable income rose to a record 150.8 percent at the end of June from 149.5 percent in the previous quarter, according to Statistics Canada data.

Flaherty said today he would consider further actions if there was “clear evidence of a bubble in the housing market in Canada, which we have not seen.”

Bank of Canada Governor Mark Carney said in June 15 speech that housing prices in some parts of the country are reaching “severely unaffordable” levels.

--Editors: Paul Badertscher, Gail DeGeorge

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To contact the reporter on this story: Theophilos Argitis in Ottawa at targitis@bloomberg.net

To contact the editors responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net; David Scanlan at dscanlan@bloomberg.net.


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