“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.”
The seemingly endless government mortgage policy tinkering is the biggest worry for this one executive.