Real estate veteran has a warning for policymakers

by REP11 Sep 2017
The seemingly endless government mortgage policy tinkering is the biggest worry for this one executive.

“The thing that worries us the most is really the series of different policies being implemented by different levels of government,” Brad Henderson, CEO and President of Sotheby’s International Realty Canada, said. “At some point in time there can be a breaking point. So I think the message is caution and a slow approach is better than piling on.”

Henderson’s message comes on the heels of the latest potential impediment for aspiring Canadian homebuyers: The second Bank of Canada increase in a year.

The Bank announced Wednesday it was increasing its target for the overnight rate to 1%, citing strong economic performance.

“Given the stronger-than-expected economic performance, Governing Council judges that today’s removal of some of the considerable monetary policy stimulus in place is warranted,” the Central Bank said. “Future monetary policy decisions are not predetermined and will be guided by incoming economic data and financial market developments as they inform the outlook for inflation.

“Particular focus will be given to the evolution of the economy’s potential, and to labour market conditions. Furthermore, given elevated household indebtedness, close attention will be paid to the sensitivity of the economy to higher interest rates.”

And while the rate itself isn’t enough to cause panic among industry stakeholders, it, along with several other previous policies, is just an additional roadblock potential buyers now face.

“So any one of these individual items isn’t enough to have an impact but the more that come -- and OSFI and others are looking at additional measures – at some point in time it will start to have an impact,” Henderson said, citing last year’s mortgage rule changes as well as provincial policies in both BC and Ontario. “And so we’re concerned that there is a series of not necessarily coordinated activities that are going on and that no one is really looking at it from a broader perspective. So we just hope the government takes a measured approach to these things because they can go too far and have unintended consequences of creating the problem that many of them are trying to avoid.”

COMMENTS

  • by Ken McClelland 9/11/2017 12:46:03 PM

    This government through its fiscal policies of continually tightening mortgage policy and proposing punitive tax changes to entrepreneurs is doing everything it can to discourage individual initiative, small/medium business, investment and yes, even home ownership. This mortgage tightening has the effect of removing buyers from the market, or at minimum reducing the range that they can buy in, and driving prices down as demand slackens. This results in a big equity hit for those already in the market, and is just one of the ways this government is attempting to level the playing field between renters and owners and redistribute wealth by implementing policies that have the effect of confiscating homeowner equity. The PM's father openly admired Communism, and the apple apparently didn't fall far from the tree.

  • by Jitu 9/11/2017 2:05:56 PM

    So ironical! Now the time has come when brokers will tell govt how to formulate policy ? They think the policy makers are uneducated and has lack of ability to foresee the impact?

    These brokers are the same people, who has no data, no idea about how many deals were done on behalf of foreign nationals.


  • by Atul Prakash 9/11/2017 2:43:28 PM

    Government have to function in a non-partisan manner in a functioning Canadian Democracy. Even though the Government acted late, it realized that over fueling the housing market had it's undesired consequences. The Citizens were unable to live a good life style due to the the greed that their house is selling for higher and higher prices by the month. Bidding Wars created by tactful realtors converted the house into JACK AND THE BEANSTOCK. Jack the house owner was likey to reach the clouds.

    A balanced Government should never encourage one asset over the other for it's citizens. Owning Real Estate, having a Ample Retirement Savings, Life Insurance, Childrens Education Funding, Money for Health Care, Vacation and Day to day Household Expenses must all be available for regular life.
    I am happy that the Government has realized that purchasing beyond the earning capacity of an average Canadian Family bodes ill for the economy. They have finally taken a strong step and I congratulate them for their whip!















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