Capitol Economics are the latest group to issue a warning about the Canadian housing market claiming that it is set for a 25% plunge in prices.
“Housing valuations have lost all touch with fundamentals and household debt is at a record high,” economists at the economic research consultancy Capital Economics say in their most recent Canada Economic Outlook, issued Wednesday.
“Our fear is that, with the housing bubble now close to bursting and commodity prices retreating, Canada will go from leader to laggard.”
The report predicts a fall in house prices by as much as 25 per cent over the next three years.
A domestic housing boom coupled with high commodity prices worldwide have spared the economy the severe recession felt by other developed countries.
Hat-tip to Gordholio for the link.