Self-Reinforcing

: The central bank, Poloz added, weighed in on the long-running issue this week after seeing evidence these markets were fuelled by "self-reinforcing" expectations among prospective buyers and lenders that the current skyward price trajectory would continue. "You have to admit the possibility that the price could actually decline in these circumstances," Poloz told a news conference in Ottawa after the release of the bank semi-annual assessment on the state of Canada financial stability. "But we're not predicting that or anything. "We're just saying the risk that that could happen, whatever number it is, is growing as we sit here." The document noted year-over-year house price growth in the greater Vancouver area hit 30 per cent last month, up from 15 per cent in December, according to Hamilton Spectator. In Toronto, prices increased by 15 per cent, compared to 10 per cent six months ago. Governor Stephen Poloz cautioned that climbing real estate prices have outpaced local economic fundamentals like job creation, immigration and income growth. Vulnerabilities linked to greater imbalances in regional housing markets and the continued rise of household debt were higher than they were six months ago, the bank said in its latest financial system review. Going forward, Poloz said the longer these risks prevail, the bigger impact they could have. "It not as though there been some sudden change or anything like that, but all of the evidence continues to accumulate," he said. While the probability of a trigger, such as a severe recession, remains low, the bank said the severity of such an event has increased since its December assessment. (www.immigrantscanada.com). As reported in the news.