8 March 2011

BMO Capital Markets’s economist, Robert Kavcic said in his speech: “Canadian residential construction activity is stabilizing in accord with today’s demographic demand”.
It’s interesting to note that economists have expected such a scenario: after coming out of the recession (2008-2009) the housing market activity should decrease because of satisfied demand and interest rates hike in mid-2010.
But the Bank of Canada can’t raise rates because of the weak recovery, so there’s a certain possibility that new home buyers are taking on more debt than they can afford.  
Finance Minister Jim Flaherty has already tightened mortgage rules for the third time in two years in order to prevent the housing bubble. And the latest real estate market data shows these tightening are working.

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