Bank of Canada Determined to Keep House Prices Inflated
Ironically, back in 2012 the Bank of Canada warned about rock bottom interest rates creating a potential housing bubble. Here’s an excerpt from a CBC article: “We’re warning of an issue at a time that we can still do something about it,” said Bank of Canada Governor Mark Carney. According to Carney, there are a number of defences to protect against a housing bubble. “First and foremost, it’s the decisions of the individuals who take out the loans, and Canadians are a smart and prudent people,” he said.
Vancouver real estate prices are up 49% since February 2012. The typical condo now costs over half a million at $526,300 and rents are greatly outpacing wage growth. Meanwhile, in Toronto, prices have soared 27% in the last year alone. Yep ten years after the financial crisis the Canadian economy continues to struggle despite record low interest rates. A failed central bank experiment that has pushed real estate prices and rents into crisis mode. Despite the Bank of Canada’s warnings back in 2012 the ability do something about it has come and passed and despite taking responsibility for inflating a housing bubble their policies remain unchanged.
https://www.youtube.com/watch?v=mlm80x9KPFg Now the only hope remaining is to keep the market goosed long enough for the economy to miraculously recover. At least that was the message from current Bank of Canada Governor Stephen Poloz the other day. “It is why the interest rate is quite low now, is to give the economy extra room to grow … if we were to raise interest rates back to normal prematurely, like today, the economy would, I’m certain, have a recession.”
