Are we careening towards a sharp correction in house prices across the country, or are we just comfortably ensconced in the new value of property?
A Goldman Sachs report is the latest voice of warning about overbuilding and overpriced houses in this country.
Adding its voice to a growing chorus of concern, a report from Hui Shan, an economist at Goldman, late last week warned: “what goes up can keep going up, but then tends to come down.”
Ranking high-growth property markets in the last four years, Canada comes fourth behind Israel, Norway and Switzerland, according to her research. But unlike some other markets, construction activity has been trending up for years and has not shown signs of slowing down in Canada, she explained.
“If the elevated level of homebuilding persists in coming years, the risk of overbuilding will increase substantially. And if the ongoing housing boom is followed by a housing bust, the price decline can be quite significant given the excess supply of housing at that point,” she said.
On the bright side for some, they are predicting that prices could still see some upside before correcting. Read the full article over at CNBC.