‘Welcome Signs Of Cooling’ In Canada’s Overvalued Housing Markets: IMF
Canada’s housing markets will cool this year, leading to a more “balanced” economy — one that is not as dependent on growing consumer debt, the International Monetary Fund says.
In a report released Friday, the IMF estimated house prices are overvalued by 7 to 20 per cent, with “significant regional differences” in the amount of overvaluation.
That’s a somewhat lower estimate than the Bank of Canada, which recently estimated house prices to be as much as 30 per cent overvalued in some markets.
“Canada’s housing market rebounded in 2014, fueled by low and declining interest rates, although there are some welcome signs of cooling especially in overheated markets,” the IMF report stated.
“Welcome” because the IMF sees risk to Canada in growing household debt. The organization is worried that the country’s economy continues to rely too heavily on consumer debt, and that the kind of debt Canadians are taking on is riskier than it used to be.
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