By Dale Smith OTTAWA (MNI) - The Canadian general election saw more of an emphasis on housing this week, despite continued concerns that there is a bubble in the already hot housing market. On Wednesday, Liberal Party leader Justin Trudeau announced plans to help more Canadians finance the purchase of their homes by allowing them to use more of their registered retirement savings to go toward a down payment. "Safe, adequate, and affordable housing is essential to building strong families, strong communities, and a strong economy," said Trudeau. "We have a plan to make housing more affordable for those who need it most - seniors, persons with disabilities, lower-income families, and Canadians working hard to join the middle class." Earlier in the campaign, Conservative Prime Minister Stephen Harper pledged to raise the amount that first-time home buyers can draw from their Registered Retirement Savings Plans (RRSPs) from C$25,000 to C$35,000. Trudeau's plan would keep the level at C$25,000 but would open it up so that it is not tied to a first home purchase. Trudeau also echoed Harper's pledge to investigate the cause of high housing prices in markets like Toronto and Vancouver, where speculation in the condo market is a common complaint. "Overall these are questionable proposals," said Mike Moffatt, economist with the Ivey School of Business at Western University. "This is throwing more fuel on the fire of the overheated housing market, but you also worry about what this is doing about the long-term savings of Canadians if that money is not getting put back into RRSPs at the rate that it's supposed to, according to the policy." Moffatt adds that the housing price investigation is needed because there is currently a lack of adequate data on housing markets in Canada. Earlier this week, Canada Mortgage and Housing Corporation confirmed that "strong condominium activity in Toronto" was behind the strengthening trend in housing starts. The latter rose at an annual rate of 216,924 in August, up from 193,253 in July, beating once again analysts' expectations. The six-month trend, considered less volatile and therefore more reliable, was also up in August, showing ongoing resilience in the housing sector. Looking ahead, while building permits, an indicator of construction activity over the next few months, edged down 0.6% in July, the residential segment actually rose 8.7%, led by multi-family dwellings, with the Vancouver area registering the largest advance. In terms of prices, Toronto and Vancouver were among six of 11 metropolitan areas to record increases in July, driving the Teranet-National Bank National Composite House Price Index up 1.2% on the month to a record high, for a seventh consecutive gain. Teranet commented that the resale market in Vancouver and Toronto is indeed a seller's market. Still, the historically low interest rates continue to remain an incentive for households to buy homes, combined with continuing improvement on the labor market front. While the unemployment rate increased to 7.0% in August, the move was led by a higher participation rate, with full-time employment also on the rise. Household definitely debt remains on the Bank of Canada's radar of financial risks. Mortgage debt was behind a 1.8% increase in total household debt in 2Q, according to data from statistics Canada Friday. The ratio of total household debt-to-total assets rose to 17.9% in 2Q, with mortgages representing the largest portion of total borrowing. The different parties have been short on specifics, however, regarding the need to tighten mortgage policy rules or not. Looking at polls, there has been some movement this week, with the Liberal Party now taking a narrow lead in recent days, while the Conservatives have dropped to third place. According to aggregated poll data, the Liberals could currently command a minority government based on the projected seat count, but no party remains close to a majority government. Mulcair stated this week that he is more open to a coalition agreement with the Liberals, but that the Liberals rejected any advances. --MNI Ottawa Bureau; tel: +1 613-853-9648; email: yali.ndiaye@mni-news.com [TOPICS: M$C$$$,MC$$$$]
Amid fears of a Canadian housing bubble, 2Q major parties have spoken this week about property market policies in the run up to the country’s forthcoming General Election. The Liberal Party’s Justin Trudeau announced plans to allow Canadians to use registered retirement savings as a deposit on a home due to increasing levels of unaffordability; the policy echoes a scheme of the Conservative Party, although the latter scheme is only applicable for first-time home buyers. Despite this, both parties have remained vague on any standpoints regarding mortgage policies.