April 6, 2017 / 2:43 PM / 3 years ago

UPDATE 2-Canada's Morneau to meet with Ontario on Toronto housing

 (Adds response from Sousa)
    By Andrea Hopkins and Matt Scuffham
    OTTAWA/TORONTO, April 6 (Reuters) - Canadian Finance
Minister Bill Morneau and Ontario Finance Minister Charles Sousa
will meet to discuss housing affordability in Toronto amid fears
that a real estate bubble has developed in the nation's largest
    A date was not set for the meeting to discuss ways to rein
in speculation and soaring prices in Toronto, but the two
policymakers exchanged letters agreeing on the urgency of the
situation and the need to address it.
    While Sousa has urged the federal government to consider
options to improve housing affordability, including increased
taxes to discourage speculation or house "flipping," he stressed
that policies must be planned carefully.
    "It is key that any future actions must ensure the stability
of the market and do not negatively impact Ontario homeowners or
the province's economy," Sousa said in a letter to Morneau on
    Sousa's office provided the letter.
    Toronto prices have more than doubled since 2009, even after
housing has moderated in other parts of the country, and the two
levels of government have been jockeying for weeks about which
is best placed to respond to what economists have called a
    A report released on Wednesday showed the average home price
in Toronto was up 33.2 percent in March from a year earlier.
    Morneau wrote to Sousa late on Wednesday to request the
meeting, and Sousa responded on Thursday, offering to host it at
his office in Toronto "as soon as possible."
    "I believe we must take a closer look at these evolving
market conditions and take stock of its implications for our
largest urban area," Morneau said in his letter.
    Morneau also invited Toronto Mayor John Tory to the meeting.
Spokesman Don Peat said Tory was looking forward to attending.
    Warnings about the overheated housing market in Canada's
largest city have reached a fever pitch, with the country's    
biggest banks and lenders expressing concern.
    Royal Bank of Canada         Chief Executive Officer Dave
McKay said on Thursday that overheating housing markets could
inhibit Canada's economic growth and urged the federal and
provincial governments to work together to address the issue.
    "Any single solution is unlikely to be successful on its
own," McKay said at the bank's annual meeting. 
    "A complex problem like this requires a multi-faceted
solution, which addresses supply constraints and speculative
forces and is mindful of the rate environment, which can be a
moderating force," McKay said at the bank's annual

 (Reporting by Andrea Hopkins in Ottawa and Matt Scuffham in
Toronto; Editing by Andrea Ricci and Lisa Von Ahn)
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