Bill Downe says that when house prices decline, people tend to stay in their homes longer than they had planned and pay down their debt, thus allowing the market to repair.

Downe says that’s what happened during the last real estate crash in the U.S., and although the situation in Canada is different, the outcome would likely be the same.

He made his comments following a speech he delivered to the Canadian Club of Toronto on Thursday.

In recent weeks, the OECD and the IMF have both called for more government measures to rein in rapidly rising house prices in cities such as Toronto and Vancouver.

However, Downe said the measures introduced recently by the Ontario government — including a 15 per cent tax on foreign buyers — need time to work their way through the system.