Canada's largest real estate firm has called out the Bank of Canada to advise the monetary authority as to the possible issues that can result if the interest rates are further cut. In a report from theglobeandmail.com, Royal LePage said that if the interest rate is further lowered, it would 'overstimulate' the already red hot housing sectors in major cities such as Toronto and Vancouver.
The firm added that the current market situation in these two metropolitan areas has had sharp rises in pricing, which can be further aggravated when individuals flush with cash from debt instruments enter the already crowded market.
According to LePage's Chief Executive Officer Phil Soper, "While the oil shock has been a troublesome drag on our economy this year, it seems premature to ring the recession alarm bells now, injecting further monetary stimulus."
He added, "The country's all-important real estate market simply does not need a rate cut."
This was echoed in a report from business.financialpost.com, where LePage's second quarter market survey was quoted. According to the news item, the current average home price in Canada had increased by a margin between 3.9 percent and 7.5 percent compared to last year's numbers.
In concrete numbers, a detached bungalow home rose by 7.5 percent to the current price of C$438,938. A standard two-storey home increased by 6.8 percent to its current level of C$471,002 while condominium prices jumped by 3.9 percent to its current price of C$268,583.
The fear of LePage was explained by Soper, who said, "I worry that stoking this engine further could move us from a perfectly manageable major market expansion into a more difficult correction, as price levels decouple from more household incomes."
Another report, this time from huffingtonpost.ca, said that Royal LePage had observed while there are some with sharp rises in prices, there are other areas with moderate increases or even had the same prices from the previous quarter. They identified these areas as Halifax, Fredericton, Ottawa and Edmonton.
