Outgoing Bank of Canada Governor Mark Carney is warning Canadian homeowners not to count on the value of their home continuing to rise as they prepare for retirement.
In an exclusive one-on-one interview since being named as the new head of the Bank of England, Carney told the host of CTV’s Question Period that housing prices cannot stay this high for much longer.
“I know from my own personal experience that the value of my house has doubled in five years... It’s certainly not normal, and you certainly shouldn’t expect the value of your house to perform in that way,” he told Kevin Newman.
Carney added that Canadians would do well not to think that they can rely on their home’s value to pad their retirement nest egg.
“That’s the right way to think about it,” he said. “Is the value of your home going to continue to inflate? I mean real wealth is built though innovation, it’s gained through hard work. It’s not through some magical asset inflation.”
He added that it seems that Canadians are finally starting to accept that, particularly now that housing markets have begun to cool.
“So we’ve seen adjustment in the housing market, we think there’s a bit more to come in the next few years. Again, I think Canadians have listened to the message and they are adjusting.”
Carney has warned homeowners many times about the perils of assuming that interest rates would remain low and house prices would remain high.
He worried that too many homeowners could find themselves making monthly mortgage payments they cannot afford for a house that’s no longer worth what they thought it was.
Carney is winding down his time at the helm of the Bank of Canada. In November, he accepted a five-year appointment as the head of the Bank of England. The bank confirmed that appointment last week, and Carney is set to begin his new position on July 1.
Watch Kevin Newman’s full interview with Governor Carney on CTV’s Question Period this Sunday at 11 a.m. (noon in Atlantic Canada.)
