The federal government plans to work with British Columbia and Ontario and the cities of Toronto and Vancouver to keep a close eye on housing markets in those two cities and across the country., Finance Minister Bill Morneau said Thursday.

"The working group will review the broad range of policy levers that affect both supply and demand for housing, the issue of affordability, and the stability of the housing market," Morneau said in a speech to the Economic Club in Toronto on Thursday.

Morneau said that while he worked with his provincial counterparts on Canada Pension Plan issues, the housing market was also a major topic of conversation in Vancouver at their meeting Monday evening.

"Housing prices have surged by 15 per cent in Toronto, and 17 per cent in Vancouver in the last year alone," Morneau said. "People want to know what's going on."

Managing the housing market to ensure new buyers can still get in without harming existing owners is an "extremely complex problem," Morneau said, made even more so by the fact that no level of government has complete control over the issue.

"We want to make sure housing stays affordable for Canadian families but we also want to make sure the market stays stable, that it's not vulnerable to economic shocks," he told the CBC's Peter Armstrong in an interview set to air on The Exchange at 7 p.m. eastern time.

"It's important to understand that while the federal government has some levers it can pull, we don't have all of them," Morneau said.

Morneau recently increased the minimum down payment for homes over $500,000, a measure aimed specifically at cooling the Vancouver and Toronto markets.

The working group created will work through the summer and advise policymakers on how to proceed at the end of the summer and beyond, he said. It's all part of the "deep dive" Ottawa is taking to get more information on the housing market.

"We are looking very carefully at data on the housing market across the country and what's driving demand and limiting supply," Morneau said, singling out the impact of foreign money into the market as being something that needs close further study.

"Since the financial crisis, we've seen pockets of risk emerge," he said.

The Toronto Real Estate Board has reported that the average price for a detached home in the city last month was $1.28 million, while the average price for all homes was $782,051.

The Real Estate Board of Greater Vancouver said that its benchmark price for detached properties has risen above $1.5 million.