Canada sees soft landing for housing By Paul Vieira OTTAWA--Canadian Finance Minister Joe Oliver said Monday hes comfortable the countrys housing market is headed for a soft landing, although added the government could take further measures to reduce taxpayers exposure to housing. His comments came after a meeting with Canadian private-sector economists in Ottawa, in which they laid out their view of the economy over the medium term. The most recent survey from economists, released Monday, indicate they expect 2.2% economic growth in 2014, or a down a notch from the 2.3% forecast in the governments 2014 budget plan. Overall, Mr. Oliver said he was comfortable with the Canadian outlook, and that the government remained on track to balance the budget in 2015, or around the same time the Conservatives, led by Prime Minister Stephen Harper, face re-election. On Canadas housing sector, a subject of much debate domestically and internationally, Mr. Oliver said recent signs of strength in real-estate sales dont signal the countrys housing market is headed into bubble territory. He said that, based on advice from economists and the Bank of Canada, the housing market appears headed for a so-called soft landing. On Monday, the Canadian Real Estate Association said existing-home sales in May posted their biggest month-over-month increase in nearly four years, with over three-quarters of markets posting sales gains. Mr. Oliver said the Conservative government and Canada Mortgage and Housing Corp., the Canada-owned dominant mortgage insurer, have taken steps to slow down activity. CMHC has also taken additional steps to reduce taxpayer exposure to the mortgage market. More steps can be taken, but we dont see the need for anything dramatic, Mr. Oliver said. Paris-based think-tank, the Organization for Economic Cooperation and Development, called on Canada last week to continue to cut the exposure the government has to housing through CMHC. Under Canadian law, homebuyers with less than a 20% downpayment must purchase mortgage insurance, which is backed by the government -- meaning taxpayers, not lenders, are on the hook for housing defaults. OECD said Canadas involvement in the mortgage market is unusual by global standards and exposes taxpayers to potentially large risks. Private-sector mortgage insurers hold roughly one third of the mortgage insurance market, and Mr. Oliver said he would like to see them take a larger share. CMHC is limited on how much mortgage insurance it can underwrite, facing a cap of 600 billion Canadian dollars ($552.69 billion). CMHC said it had C$555 billion of insurance in force as of the end of the first quarter, and expects that level to decrease to C$545 billion by the end of 2014.
Posted on: Wed, 18 Jun 2014 03:09:36 +0000
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