sharp drops in Vancouver, Toronto housing markets

OSFI tells some banks to test for sharp drops in Vancouver, Toronto housing markets

Some of Canada's banks must stress test their ability to withstand a 50 per cent drop in housing prices in Metro Vancouver area and a 40 per cent drop in the Greater Toronto Area, the country's banking regulator says.
The Office of the Superintendent of Financial Institutions also said Tuesday that the banks must all test for a 30 per cent downturn in valuations for all other areas of the country.
The OSFI said the test doesn't apply to the Big Six banks and HSBC. An OSFI spokesperson said the regulator and the Bank of Canada work together to conduct "regular macro" stress tests on the Big Six banks, which also do their own internal testing.

The sharp increases in Vancouver home prices have prompted several responses at the municipal and provincial levels. Earlier this month, the B.C. government said it will give the City of Vancouver the powers it needs to implement an empty home tax .
On Monday, the province introduced legislation that would add a 15 per cent property transfer tax for foreign nationals buying real estate in Metro Vancouver.

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