Finance Minister Bill Morneau says the government is monitoring rapidly rising home prices in Vancouver and Toronto, but one money manager says there's little Ottawa can do to cool these red-hot housing markets.

Speaking to BNN on Friday, Morneau said the federal government is ready to respond to challenges to keep the housing markets in those cities stable.

"Our main issue is to make sure we protect what's the biggest investment for most Canadians, which is their home," he said.

Morneau said Ottawa's new housing strategy encourages the development of more affordable housing and increases funding for rental housing. 

He said doesn't expect home-ownership in cities such as Toronto or Vancouver will be reserved only for the rich – much like New York City or London.

But Ottawa's latest move to slow price growth in both markets has done little to stem the flow of eager buyers.

Canadian homebuyers are now required to put at least 10 per cent down on the portion of a home that costs more than $500,000 – a change that came into effect in February.

Average price tops $1 million in Toronto, Vancouver

But the Toronto Real Estate Board reported last week that residential property prices in Toronto have shot up 12 per cent over last March, with the average price for a detached home in the city hitting $1.17 million.

Meanwhile, the Real Estate Board of Greater Vancouver reported that the average price of a detached home in the city was $1.34 million, up 27.4 per cent over last March, while property sales were up 24 per cent over February.

"On the one hand it's good news that (the government) is aware and they're not sort of ignoring it," said Kash Pashootan, a senior vice-president at First Avenue Advisory, Raymond James Ltd. "The other side is, are we too far down the road?" he asked.

Pashootan told BNN on Monday there remains a great deal of risk in Toronto’s and Vancouver’s housing markets.

"If we look at how much average incomes have increased over the last decade, and how much average home prices have increased, there's a real disconnect between the growth in wages and income, and housing prices," he said.

Pashootan said one of the biggest risks in the housing market is foreign money, and whether investors will continue buying Canadian properties.  

A report from the Canadian Housing and Mortgage Corporation released last week revealed that foreign buyers are scooping up new condos in Toronto and Vancouver.

About 10 per cent of newer stocks condos in Toronto and six per cent in Vancouver are owned by foreigners, according to the report.

"Given that the Canadian dollar has weakened from its peak level a few years back, it does bode well for the idea of foreign money continuing to come into Canada," Pashootan said.

But he noted that the Canadian dollar is very much dependent on the price of oil, which could change in the months to come.

Pashootan said despite better-than-expected job numbers and a strong GDP report, he doesn't believe the Canadian economy is "out of the woods."

"I think for the Canadian economy, the question is…how do we get the consumer to spend for GDP growth when we have household level debts as high as they are?" he said.

Morneau, meanwhile, said he's very focused on reducing Canadians' net debt to GDP over the term of the government's mandate.