OTTAWA – A new report predicts that Canada’s housing market is poised for a collapse and is only waiting for the trigger of rising interest rates expected for later this year — a view that flies in the face of many other forecasts.
Capital Economics calculates Canadian home prices could fall by about 25 per cent — and even as much as 35 per cent — over the next three years once the Bank of Canada begins tightening monetary policy.
Most economists expect the central bank will begin doing just that in late spring or early summer, with the trendsetting rate rising from the current one per cent to over two per cent by the end of the year.
And the Bank of Canada is expected to keep hiking the policy rate next year until it returns to normal levels — about 3.5 per cent — by the end of 2012.
