In a report released on Thursday (January 26), the Royal Bank of Canada cautioned that the trends and conditions in Toronto real estate point to the growing possibility of government intervention.
The statement came in the wake of fresh figures showing that home sales in Toronto reached an all-time high in 2016, Reuters reported.
“The likelihood of policy intervention to address housing risks in Toronto is increasing,” RBC economists wrote in the bank’s January Canadian Housing Health Check.
RBC added that prices in the city’s single-family detached segment have maintained their overheated pace of growth due to market scarcity.
However, the report did not specify if the required measures would be implemented by the Canadian financial regulator, the federal government, or provincial authorities.
The Canada Mortgage and Housing Corp (CMHC) warned that Toronto and five other major metropolitan markets across Canada exhibited strong signs of problematic conditions.
“Price acceleration in Vancouver, Victoria, Toronto and Hamilton indicates that home price growth may be driven by speculation as it is outpacing what economic fundamentals like migration, employment and income can support,” CMHC chief economist Bob Dugan said in a statement.
“For this reason, homebuyers should ensure that their purchases are aligned with their needs as well as the long-term market outlook.”
Strong evidence of problematic conditions persists in real estate market: CMHC