UPDATE 1-OECD urges Canada to further tighten housing regulations

(Adds comments from finance minister)
OTTAWA, June 13 (Reuters) - Canada's housing regulations
should be further tightened and regionally targeted to help cool
real estate markets that are booming in some of its major
cities, a report from the OECD recommended on Monday.
A disorderly housing market correction, particularly in
Toronto and Vancouver, remains the main domestic downside risk
to Canada's economic outlook, the Organisation for Economic
Co-operation and Development said.
Vulnerabilities related to housing and high household debt
are still increasing, though at a slower pace, the report found.
Canadian authorities have taken steps to shore up the
housing market, but further regionally focused measures should
be considered, it said.
The Canadian government has acted five times since 2008 to
clamp down on heated housing markets, most recently in December
2015.
But policymakers are challenged by the need to prevent
certain housing markets, such as those in Toronto and Vancouver,
from becoming overheated without further depressing slower
activity in commodity-sensitive regions.
"We recognize it's a complex market with different
situations going on," Finance Minister Bill Morneau told
reporters.
Morneau said the government was looking closely at the
impact of a number of factors in the housing market, including
demographics, supply issues and foreign investment.
The Bank of Canada warned last week that the rapid pace of
home price increases in Toronto and Vancouver was unlikely to
continue.
Targeted measures could go beyond the changes to capital
requirements in regions with high price-to-income ratios that
are already planned by Canada's financial regulator to make
capital requirements more responsive to market developments, the
OECD said.
It cited New Zealand as an example where policymakers have
put lower caps on loan-to-value ratios in the hot Auckland
market.
On the whole, the OECD sees Canada's economy growing 1.7
percent this year and 2.2 percent next year, unchanged from its
downgraded forecasts released earlier this month. It had
previously forecast 2 percent growth in 2016 and 2.3 percent in
2017.