The risk is that expectations become extrapolative, prompting the classic market emotions of greed and fear – greed among speculators and investors – and fear among households that getting a foot on the property ladder is a now-or-never proposition. Policy implications The Bank manages policy for the economy as a whole, rather than any specific region or sector.
In this context, what does the Bank of Canada expect for housing? In a word: moderation. In the Bank’s view, Canadian housing market developments in recent years have largely reflected the evolution of supply and demand. While supply of new homes should remain relatively flexible, many of the supportive demand forces are now increasingly played out.