Parts of the Canadian housing market, especially condominiums in some major cities, have seen prices jump to levels that warrant caution, the head of the country’s central bank said in an interview broadcast on Saturday.

“There are issues, particularly in some parts of the country in the condo market, without question, where activity has been particularly strong, has reached back to levels of the late 1980s,” Bank of Canada Governor Mark Carney told CBC Radio when asked if Canada was experiencing a housing bubble.

“And in some of our major cities, without question, valuations are extremely firm, to put it one way. And so some caution is warranted in that environment.” Carney did not mention specific regions or cities.

He noted that regulators had toughened underwriting standards for home equity loans and the federal government had tightened mortgage rules three times to cool the housing market. The central bank has previously suggested hiking interest rates to cool housing would be a last line of defence.

Recent data showed Canadian home prices fell in March from year-ago levels, but that prices in Toronto, which has seen a condominium construction boom, jumped 10.5 per cent. Some analysts also are concerned about Vancouver’s housing market and condo sector. While overall prices there have cooled from a year ago, it remains Canada’s most expensive property market.

Unlike the United States, Canada has experienced a post-financial crisis housing market rally triggered by record low borrowing costs.

Carney spoke after the Bank of Canada surprised markets last week by explicitly warning it may need to start raising interest rates given reduced slack in the economy.

The central bank chief reiterated in the interview that the economy was almost back to full capacity.

“It’s in that environment that given the fact that rates are exceptionally low, there’s considerable monetary policy stimulus, that we have signalled that if this continues, in light of this situation, some modest withdrawal of that considerable monetary stimulus may become appropriate,” he said.

“But obviously that’s a decision we weigh carefully against how things evolve here in Canada, and importantly how things evolve globally because there are big global risks.”

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