A top economist doesn't envision a bubble situation for the Canadian housing market, but believes that troubles lie ahead due to government intervention, reports the Financial Post.
Economist Will Dunning is concerned that the opinions and forecasts expressed by economists, the media and politicians has resulted in the federal government intervening to tighten the mortgage rules on four separate occasions – something he believes the market didn’t need.
The government's meddling, says Dunning, has created a “dangerous” scenario that could potentially throw the housing market off course. This will impact jobs and the country's gross domestic product.
“The deliberate reduction of housing demand, which is now clearly visible in the new and existing arenas (for housing) creates a risk that prices could fall, unnecessarily. Once prices start to fall, the outcome is unpredictable,” Dunning said in a release.
Government policy has been focused on cooling off the overall housing market, but it only seems to target markets that are on fire.
Many believe Vancouver has been influenced by external factors like foreign investors, while the growing single-family home market in Toronto is seeing a significant inventory shortage that experts believe is being caused by municipal and provincial land use policies.
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