Canada’s top banking regulator says he is not concerned about the impact of a weakened urban

condominium market on the country’s top lenders and that the trends might help ease Canada’s affordability crisis for young homebuyers.

“Overall, capitalization of the banking system is sufficient to deal with challenges in commercial real estate and in newly built condominiums in Toronto (and) Vancouver that may not be moving as quickly as in the past,” Peter Routledge, head of the

Office of the Superintendent of Financial Institutions (OSFI), said at the Scotiabank Financials Summit in Toronto on Wednesday. “So, if you’re talking about systemic stability, we’re OK with it.”

The condominium market in the Greater Toronto Area (GTA) experienced “an observable oversupply, with a substantial influx of new completions” in the first half of the year, which led to “downward pressure on prices and rents for new units,” according to an Altus Group Ltd. report on Aug. 13.

Condominium apartment sales between 2022 and 2025 dropped by 75 per cent in the GTA and 37 per cent in the Vancouver Census Metropolitan Area, according to a June report by Canada Mortgage and Housing Corp. (CMHC), which also said inventories more than doubled and prices fell.

Routledge said the trends aren’t bad for everyone, especially given recent conversations about younger Canadians feeling barred from the

housing market because prices were too high. “It wasn’t 12 months ago we were talking about (how) there weren’t enough housing units for Canadians,” he said. “So when you talk about in one of our largest cities, a bit of excess inventory in condominiums, which are starter places for younger Canadians who want to get into the real estate market, you know that there’s a little bit of excess supply and prices are coming down off all-time highs.”

Routledge said OSFI has put safeguards in place to ensure the banks can withstand market downturns, including in real estate, such as requiring banks to build up and hold set amounts of capital. On the residential side, the regulator requires stress testing of buyers to help ensure they can manage their

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mortgages . “We’ve been talking about commercial real estate risk in our annual risk outlooks for a number of years now, so I’d be disingenuous if I said we weren’t concerned,” he said. “(But) we have the resilience already. Is not the reason to have this resilience to stay out of the way of the market and to let the market figure out what the appropriate price level is for condominiums that brings young Canadians in so that they can afford it?”

Routledge added that the developments in the condominium market could mean some investments don’t work out as well as hoped.

“But in the long run,” he said, “shouldn’t the market, not the regulator, deal with that?”