Report attempts to quell fears of residential real estate price bubble
Vancouver home prices set record as index shows prices rising for the fourth straight month
OTTAWA — A new report into Canada’s hot housing market is trying to
calm fears of a coming collapse in prices, saying the biggest threat to
home valuations may be government meddling with mortgage rules.
The
paper by economist Will Dunning, who runs a real estate market research
firm in Toronto, says Canadians have been mostly prudent investors in
housing and that the market can absorb either higher prices or a
one-per-cent hike in interest rates.
Rather than being over-valued, house prices in Canada are fairly valued and may even be undervalued, he says.
The
paper was released on the same day a new Teranet-National Bank
composite price index rose to a new all-time high, showing home prices
rose 0.3 per cent in February.
The Bank of Canada and the federal
government have warned about an over-heated housing market for several
years, arguing that once interest rates start rising, the roof will cave
in for some home buyers.
The Organization for Economic
Co-operation and Development (OECD) has also pointed to Canada as having
the world’s most over-valued housing market. (Read More)
Comments :
We have had the Canadian Real Estate market on our watch list for some time now, particularly the Toronto Condo market where a bust in this bubble could suppress prices anywhere from 30 to 50% in short order. Once interest rates commence there inevitable climb, this adjustment is an absolute mathematical certainty.
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