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UPDATE 1-BoC concerned home buyer expectations may be driving up prices

Published 2016-06-02, 02:07 p/m
© Reuters. UPDATE 1-BoC concerned home buyer expectations may be driving up prices

(Recasts with housing comments, adds byline)
By Erin Pottie
SYDNEY, Nova Scotia, June 2 (Reuters) - The Bank of Canada
is concerned that the acceleration in housing prices in Toronto
and Vancouver may be partly due to purchases based solely on the
expectation that prices will keep going up, Deputy Governor
Lawrence Schembri said on Thursday.
Schembri said that Canadians moving away from
resource-producing regions to the major cities of Toronto and
Vancouver in order to find jobs has created a huge demand for
housing in those cities, driving prices up as supply remains
relatively limited.
But he expressed concern that such fundamentals are not the
only reason for rising prices.
"The concern that we have at the Bank of Canada is these
price increases may reflect in part the fact that certain people
(are) buying housing on (speculation), expecting this price
increase to continue," said Schembri.
"People should not be buying housing based on the
expectation these prices are going to continue" as the demand
from the influx of workers into those regions will not continue
at the same rate, Schembri said.
He was speaking during a question-and-answer session
following a presentation on the outlook for the economy.

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