Booming housing market a challenge for the Bank

The housing market has gathered more momentum in the past month and, if this continues, could prompt the Bank to tighten policy sooner than we anticipate. The Teranet measure of house price growth rose to almost 10% y/y in February and the MLS measure jumped to 17.3% y/y. While the MLS measure does not use as sound a methodology as the Teranet one, it tends to react more quickly to conditions on the ground, and so the acceleration is probably a sign that the Teranet measure will rise further. That is certainly the message from the sales-to-new listing ratio, which declined in February but remained near a record high.