Housing prices to drop 25% in Canada, forecaster predicts

House prices in Canada will fall over the next several years by as much as 25 per cent, creating a massive impact on the economy and possibly pushing the country into recession, says a forecast.

“The recent housing boom has resulted in the largest rises in house prices ever seen in Canada, which have been similar in magnitude to those during the recent boom in the U.S.,” said Capital Economics analyst David Madani in a report released Thursday. “Unfortunately, the subsequent falls in prices could also be just as severe as those elsewhere.”

Madani is predicting house prices will fall by a cumulative 25 per cent over the next several years, or “in the same ballpark as the recorded declines in the U.S. and other countries.”

other economists think that prices and sales in Vancouver and Toronto are likely to dip in 2011 because the two cities have shown a significant, and possibly unsustainable uptick over the last decade.
But most have backed away from the bubble word. (more)