(Bloomberg) -- Governments may have to impose more measures to cool Toronto's housing market if prices remain “overheated” after the spring buying season, said Bank of Nova Scotia's Canadian banking head James O'Sullivan.
Toronto is the housing market of most concern in the country, with unsustainable and unhealthy price increases, O'Sullivan told reporters Tuesday after Scotiabank's annual meeting in Toronto. He'd like to see how home sales in Canada's most-populous metropolitan area play out between April and June before pushing for further measures.
“If at the end of that spring market Toronto still has higher volumes, strong double-digit price increases, then we think it'll clearly be time for further action -- and we will be supportive of that action,” O'Sullivan said. “If it remains overheated, it's time for action.”
Measures such as a speculation tax or foreign-buyers levy, such as the one British Columbia imposed last year to cool Vancouver's housing market, should both be “on the table,” O'Sullivan said, adding that mortgage market changes by federal and provincial governments in the last couple of years have removed risks in the housing market.
Still, Toronto remains an issue: the city has seen prices up 24 percent from a year ago, sparking calls by economists at Bank of Montreal and elsewhere that the city is in a housing “bubble.”
“Double-digit price increases are not sustainable and they're not healthy, and this market has been going straight up for a very long time,” O'Sullivan said. “So it's going to come to an end at some point, and it's a question of how it ends.”
O'Sullivan said he wants a smooth correction and a soft landing, which would argue for action sooner rather than later.
“It's in the best interest of everyone that we have a soft landing rather than a hard landing,” he said.
To contact the reporter on this story: Doug Alexander in Toronto at dalexander3@bloomberg.net.
To contact the editors responsible for this story: David Scanlan at dscanlan@bloomberg.net, Peter Eichenbaum at peichenbaum@bloomberg.net, Chris Fournier
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