Royal Bank CEO 'increasingly concerned' about Toronto, Vancouver housing markets

Royal Bank's CEO saidhe's "increasingly concerned" about the Toronto and Vancouver housing markets and would welcome government intervention in the problem.

RBC chief executive Dave McKay attributed the rapid increase in housing prices in the two cities to an "unhealthy combination of factors."

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He cited an imbalance in supply and demand for residential properties, low interest rates, and speculative activity.

"All of these factors are mixing to push prices up to unsustainable levels, stressing household balance sheets and locking many people out of the housing market," McKay said at the bank's annual general meeting in Toronto on Thursday.

"More and more disposable income is going towards servicing those houses," he said after the meeting.

"More capital is getting invested in those homes. And the real risk for us as an economy is the long-term drag that has on the rest of the economy as so much of a person's net worth and cash flow goes into servicing their home."

Home price gains cause alarm in Toronto area

McKay made the comments a day after the latest data from the Toronto Real Estate Board showed the average price of a home in the Greater Toronto Area increased by 33 per cent in the 12 months ended in March.

That has prompted a slew of responses about what, exactly, can be done to rein in housing costs in the city, which are now spilling over to the rental market via exorbitant rent increases.

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While price increases in Vancouver have cooled off, that city had also seen runaway double-digit gains, month after month after month, until the implementation of a 15 per cent taxon foreign buyers last year.

McKaysaid a single solution to these problems is unlikely to be successful.

Instead, he saidhe's in favour of interventions from federal, provincial, and local governments to come up with a more nuanced solution to a very complex problem.

"We would welcome any effort by the three levels of government to coordinate their interventions, and to do so reasonably quickly," he said.

"But longer-term, I believe all parties need to come together governments; developers; realtors; banks; community groups and others to accelerate our progress in finding policies and solutions for this issue."

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