BoC chief Stephen Poloz says Canadian housing market not a bubble, predicts soft landing
Canada’s housing market is not in a bubble and not likely to suffer a sudden and sharp correction in prices unless there is another major global shock to the economy, Bank of Canada governor Stephen Poloz said this week.
On Wednesday, Bank of Canada Governor Stephen Poloz reinforced the belief that the Canadian housing market is headed for a soft landing. Poloz also used this opportunity to disagree with recent statements that Canadian home prices are 21% overvalued and that the central bank should target the overnight lending rate to start increasing in a year's time.
"Our judgement is (the housing market) is a situation that is improving, this is not a bubble that exists here that would have to be corrected," said Poloz. "If there is a disturbance from outside our country that's another analysis."
Poloz strongly disagreed with recent advice from the Organization for Economic Co-Operation and Development (OECD) that the central bank start increasing the 1% lending rate, (linked to variable mortgage rates) at the end of 2014 until it reaches 2.25%.
"Those things together give us the judgments we reach and obviously they differ in a material way from what the OECD is saying ... and it's our job to reach that final conclusion," said Poloz.