It’s no secret that in election campaigns, politics often trumps policy. Consider Canada, now a little more than two weeks into a marathon (by Canadian standards) federal election campaign leading up to an Oct. 19 vote.

While on the campaign trail last week, Prime Minister Stephen Harper unveiled two measures aimed at wooing two highly sought-after voting groups: middle-class homeowners and hopeful first-timers trying to get a foot in the front door of the country’s overheated housing market.

The first is a boost to the Home Buyers’ Plan, which lets first-time buyers withdraw up to C$25,000 from their registered retirement savings plans—similar to U.S. 401(k) plans—to put toward a down payment on a new home. Under Harper’s proposal, the limit would rise to C$35,000.

The second is the restoration of a home renovation tax credit that Harper’s Conservative government first brought in to stimulate the economy during the 2008/09 recession.

Both proposals will likely resonate with their target audiences, but economists weren’t amused. One, David Madani, Canadian economist for Capital Economics, accused the Conservatives of “throwing fuel on the fire.”

“My concern is that you are extending these policies at a time when you know there is considerable overvaluation in the housing market,” he told the Financial Post on Aug. 13. “Clearly markets in Vancouver and Toronto don’t need any more housing stimulus.”

A Tale of Two Markets

Nationally, Canadian house prices have increased 60% since 2000, according to a March report from the International Monetary Fund. The prices are led by big cities like Toronto, Vancouver and Calgary.

The gains have been fueled in large part by cheap mortgage rates, which got slightly cheaper last month, when the Bank of Canada cut its overnight lending rate by 0.25%—the second reduction this year.

In July, the average detached home in Toronto sold for an average of C$996,970, up 13.3% from a year ago. The average price for all homes in the city (including condos) jumped 10.6%, to C$609,236.

That kind of price appreciation prompted government-operated mortgage insurer Canada Mortgage and Housing. to bump Toronto’s market from a moderate to a high risk of correction last week, citing prices that are outpacing growth in disposable income, along with a risk of overbuilding. The move comes after the IMF said in January that Canadian home prices could be overvalued by 7% to 20%.

In Vancouver, meanwhile, the average detached abode went for C$1.14 million in July, up 16.2% from a year ago, while prices for all housing gained 11.2%, to $700,500.

Surprisingly, the CMHC didn’t include Vancouver on its list of overvalued markets. (According to the IMF, the city has the world’s second-least-affordable housing, after Hong Kong.)

“Despite high Vancouver home prices, demand for housing across the price spectrum is supported by a growing population and growth in personal disposable income, as well as by the limited supply of land,” the CMHC report said.

Nationally, prices rose 8.9% in July, but only 4.1% if you strip out Vancouver and Toronto. As a whole, the CMHC said the country’s real estate market faced a low risk of correction.

Experts Split on PM’s Proposals

As for Harper’s promises, not everyone is convinced they’ll have much effect, assuming the Conservatives win the election and implement them.

“I look at this package of policies and consider them really kind of marginal in terms of overall impact,” Tsur Somerville, director of the Centre for Urban Economics and Real Estate at the University of British Columbia, told The Globe and Mail on Monday.

And as Canadian Edge chief strategist Deon Vernooy wrote in the June issue, it’s important to keep in mind that just because the market is overvalued doesn’t necessarily mean a quick correction is in the cards, as overvaluation can continue for a long time and isn’t always enough on its own to trigger a price drop.

But in light of weaker resource production and prices—including but not limited to oil and gas—which influence a big part of the Canadian economy, and with said economy now likely in a technical recession (defined as two straight quarters of negative GDP growth), the state of the Canadian housing market is worth keeping a close eye on.