From this Canadian Business article:
When prices do start to fall, don’t expect a quick rebound like we saw three years ago. The average home price fell by 8.5% between August 2008 and March 2009, according to the Teranet-National Bank House Price Index, in a decline sparked by the financial crisis. By November, the market had already recovered. Part of the reason for the quick rebound was massive government intervention.
The Bank of Canada moved fast to slash interest rates to unprecedented lows, allowing banks to continue lending to businesses and consumers. The federal government also established a $125-billion program to buy mortgages it had already insured from banks and financial institutions, providing even more liquidity. The government ultimately bought mortgages worth a stunning $69.4 billion. The Bank of Canada has less room to manoeuvre today. The overnight rate is now 1% compared to 3% in August 2008. Cutting rates to stimulate the market is hardly an option this time. Banks have less flexibility, too. A five-year fixed rate mortgage is roughly 3.8% today, down from 5.7% in late 2008.
Doesn’t look like there’s much more the government can do to prop up the Canadian housing market. The pending correction is long, long overdue.