Canadian home ownership costs are rising and affordability is eroding, while overvalued house prices are due for a correction in the coming year or two, a pair of reports by banks said Tuesday.
CIBC World Markets' new Home Ownership Affordability Index found home ownership was within reach for most Canadians but increasingly difficult for some. It also said about 17 per cent of all dwellings in the country were above fair value.
"While the booming housing market is starting to come back to earth, the fact that prices are overvalued today does not necessarily mean that they will crash tomorrow," said Benjamin Tal, senior economist at Canadian Imperial Bank of Commerce.
He predicted that higher interest rates will lead to a modest decline in prices, probably between 5 and 10 per cent, in the coming year or two.
May 25, 2010
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