A hodgepodge of factors contributed to the current state of Canadian real estate, which has seen an increasing number of affordability refugees fleeing from the hottest markets.

Bank of Nova Scotia vice president of economics Derek Holt stated that a combination of record-low interest rates and careless federal-level actions has led to unprecedented amounts of household debt and a price-growth juggernaut that now has the Liberal government “scrambling to undo it.”

“The rule shifts contributed, as did the long-term decline in rates both through global bond markets and Bank of Canada actions, among other factors,” Holt wrote in his report, as quoted by The Globe and Mail.

Holt added that any moderating effects of stricter federal and provincial policies have been offset by rock-bottom fixed and variable mortgage rates. The analyst further argued that B.C.’s 15 per cent tax on foreign buyers is emblematic of the simplistic approach that Canadian governments take in addressing the affordability crisis.

Such measures since 2008 “did not derail housing or mortgage markets,” Holt said. “Amidst endless fear mongering, tighter rules still gave way to record high household debt and house prices.”

“Much of that was because of the offset from lower interest rates, and here we are once again talking about the possibility that the Bank of Canada could cut rates and further feed market household imbalances assuming – as I do – that the mortgage book is still rate sensitive.”