Winnipeg Free Press - PRINT EDITION

Toronto condo market poses economic risk to Canada

  • Print

OTTAWA -- An overbuilt and overpriced condominium market is posing a risk to the economy, the Bank of Canada warned Thursday in its latest review of the health of the country's financial system.

The central bank particularly singles out the Toronto condo market, which it notes continues to carry a high level of unsold units in both pre-construction and under-construction phases.

It urges policy-makers to continue monitoring developments in the sector, saying it is "working closely" with federal authorities to maintain an ongoing assessment of risks.

Overall, the bank says it believes financial conditions globally and in Canada have improved despite the subdued pace of the economic recovery.

In Canada, the growth in household credit has continued to slow and has fallen broadly in line with growth in disposable income. As well, overall activity in the housing market has moderated.

But the central bank is still worried about the housing market, and particularly condos in Toronto.

"If the upcoming supply of units is not absorbed by demand as they are completed over the next 12 to 30 months, the supply-demand discrepancy would become more apparent, increasing the risk of an abrupt correction in prices and residential construction activity," it said.

"Any correction in condominium prices could spread to other segments of the housing market as buyers and sellers adjust their expectations."

That could start what the bank calls a negative feedback loop. A plunge in house prices would bite into net household worth, shatter confidence and consumer spending, impacting income and job creation.

 

-- The Canadian Press

 

Republished from the Winnipeg Free Press print edition June 14, 2013 B6

Fact Check

Fact Check

Have you found an error, or know of something we’ve missed in one of our stories?
Please use the form below and let us know.

* Required
  • Please post the headline of the story or the title of the video with the error.

  • Please post exactly what was wrong with the story.

  • Please indicate your source for the correct information.

  • Yes

    No

  • This will only be used to contact you if we have a question about your submission, it will not be used to identify you or be published.

  • Cancel

Having problems with the form?

Contact Us Directly
  • Print

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

Have Your Say

New to commenting? Check out our Frequently Asked Questions.

Have Your Say

Comments are open to Winnipeg Free Press print or e-edition subscribers only. why?

Have Your Say

Comments are open to Winnipeg Free Press Subscribers only. why?

The Winnipeg Free Press does not necessarily endorse any of the views posted. By submitting your comment, you agree to our Terms and Conditions. These terms were revised effective April 16, 2010.

letters

Make text: Larger | Smaller

LATEST VIDEO

Fringe, space motifs trendy for teens heading back to school

View more like this

Photo Store Gallery

  • Aerial view of Portage and Main, The Esplanade Riel, Provencher Bridge over the Red River, The Canadian Museum for Human Rights and The Forks near the Assiniboine River, October 21st, 2011. (TREVOR HAGAN/WINNIPEG FREE PRESS) CMHR
  • Down the Hatch- A pelican swallows a fresh fish that it caught on the Red River near Lockport, Manitoba. Wednesday morning- May 01, 2013   (JOE BRYKSA / WINNIPEG FREE PRESS)

View More Gallery Photos

Poll

What do you think of the new Blue Bombers uniforms?

View Results

View Related Story

Ads by Google