The Globe and Mail reports in its Wednesday edition that Bank of Montreal economists are urging policy makers to act immediately to dampen housing prices and warning of severe consequences if nothing is done.
The Globe's Rachelle Younglai writes that with home prices spiking across the country and houses selling well over asking prices, BMO economists said policy makers need to take action to immediately break "market psychology and the belief that prices will only rise further. That would dampen the speculation and fear of missing out that those expectations are creating," BMO senior economist Robert Kavcic and strategist Benjamin Reitzes wrote in a special report titled Canadian Housing Fire Needs a Response.
The report said the price increases are going "parabolic" and that the housing market has long been "smouldering" because of rabid competition for properties. Since the pandemic started, home values have increased by at least 30 per cent in small Ontario towns and cities such as Tillsonburg and Woodstock. The BMO report outlined 10 potential cooling measures, including various taxes, higher interest rates, making the blind bidding process transparent and increasing the supply of homes in all regions.
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