The International Monetary Fund (IMF) in issuing its annual review of Canada’s economy earlier today, paints a positive outlook for Canada’s economy with a forecasted growth of 2.5 per cent in 2017, followed by a 1.8 per cent growth in 2018.
But despite this confident forecast, the IMF pointed out concerns with Canada’s housing market. The IMF’s mission chief for Canada, Cheng Hoon Lim said they like the measures Canada has taken in recent years to control the housing market but would like to see “further tightening.”
Last October, Ottawa placed restrictions in place to make it tougher to get an insured mortgage by forcing borrowers to undergo a stress test. Lim said that this seems to have an effect but not as strong as putting the brakes on the rapidly rising house prices.
“The housing market is overheated but hot spots are concentrated in Vancouver and Toronto,” Lim said in pointing out the two hottest and most concerning housing areas in Canada.
Lim went on to urge that more action is taken in the form of placing a cap on debt-to-income levels for mortgage applicants, further co-ordination between federal and provincial bodies when implementing new rules and collect better data on real estate transactions.
Through a statement, the IMF said that the foreign buyers’ tax in B.C. and Ontario “discriminates against non-resident buyers” and should be replaced with more effective tax changes aimed at discouraging speculative activity.