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We are quick to criticize government decisions that go awry, so it’s only fair to offer plaudits when elected officials and policymakers get it right on key files. Like, for instance, the cost of housing.

Several indicators suggest Canada’s insane upward spiral in home prices, driven largely by Vancouver and Toronto, has been arrested.

According to the Bank of Canada, prices likely peaked in early 2017; the international real-estate consultancy Knight Frank found that, whereas Canada’s annual price inflation was 10th in the world in the fourth quarter of 2017, it is now 15th.

Multiple factors explain the slowdown, but it is unmistakably related to the implementation of foreign ownership taxes in British Columbia and Ontario, the tightening of mortgage eligibility and other changes to home-ownership rules by the Canada Mortgage and Housing Corporation, and rising mortgage rates.

With so much of Canadians’ wealth at risk, this is a policy success. But it has not solved every problem.

Bank of Canada Governor Stephen Poloz indicated on Thursday that, while house prices and personal-debt levels appear to have stabilized, he continues to believe overall indebtedness remains at worrying levels.

The debt-to-income ratio of the average Canadian homeowner sat at just under 170 per cent at the end of 2017, and while it’s likely already trending downward as the cost of borrowing increases, it is still high.

Plus, while it might not be quite as expensive to lodge oneself as it was last year, housing costs remain prohibitively high in large Canadian cities.

Governments at all levels across the country now need to address the housing supply issue with as much resolve as they did the price issue. Their options include zoning reforms to promote high-density construction, and greater investment in affordable housing, among others.

Given the uncertainty that U.S. President Donald Trump has injected into Canada’s trade prospects, nothing will come easy. But the effective response to our real-estate bubble provides cause for optimism that governments can do more.

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