The Hongcouver | For bankers, the smell of real estate profit in Vancouver is being overwhelmed by whiff of something worse
Why are mortgage lenders who made merry in Vancouver and Toronto now queuing up to call for government intervention to hose down ‘wildfire’ markets?
In recent weeks, a conga line of bankers has warned Canada’s government that Something Needs to Be Done about Vancouver’s real estate market.
Incongruously, that’s in spite of lenders profiting handsomely from the over-leveraged city, where average house prices now sit around C$1.75million for the metro region, and the Real Estate Board of Greater Vancouver’s “benchmark” price for all residential properties is C$889,100, a 30 per cent increase over the past year.
That doesn’t come without risk, of course.
BMO, CIBC, Scotiabank and the Bank of Canada itself are all ringing alarm bells.
“The rapid pace of price increases seen over the past year … raises the possibility that prices may be supported by self-reinforcing expectations, making them more sensitive to an adverse shock to housing demand”, he said on June 9, and it “is unlikely that the current pace of price increases [in Toronto and Vancouver] can be sustained”.