TORONTO - If the Canadian real estate market continues to cool, house prices could see substantial declines next year and could fall by as much as 25 per cent over the long term, according to an economics report released Wednesday.
Though some economists have suggested that a tepid slowdown so far in the market suggests it is headed for a "soft landing," Capital Economics economist David Madani said he continues to believe that a more drastic drop is on its way.
"We think a housing correction over the longer-term is inevitable and still stand by our earlier view of house prices declining by 25 per cent," he said in the report.
Canada's real estate market is showing signs of cooling off following a post-recession boom sparked by a move to ultra-low interest rates. Both national home sales and the average home price were down year-over-year last month, indicators that the national market could be slowing. (more)