As debate about the stability of the Canadian housing market continues to swirl, a new report has come down firmly on the side of the bubble believers.

Rising debt levels, falling personal savings rates and house prices that have become detached from rents signal that a significant correction is on its way, according to Euro Pacific Canada, the Toronto-based branch of the global brokerage headed by Peter Schiff, who gained notoriety for predicting the U.S. housing meltdown. (Schiff also served as economic consultant the the failed 2008 presidential campaign of libertarian-leaning Ron Paul.)

Despite the recent efforts of regulators to cool the Canadian housing market, the report, released on Thursday, identifies several risk factors that bear a frightening resemblance to the factors that preceded the mortgage meltdown south of the border.

In addition to high levels of household debt, the report draws attention to the recent growth in Home Equity Lines of Credit (HELOCs) as a particular concern. Secured against the equity of a borrower’s home and made more attractive by bargain basement interest rates, these loans have exploded in popularity in recent years, up 170 per cent since 2001, the report notes.

While Canadian banks have tightened the strings on risky mortgages, they are continuing to stand behind HELOCs “even after this type of lending helped inflate the U.S. housing bubble,” the report warns.

According to Dan Simon, an investment consultant for Euro Pacific Canada, HELOCs are akin to “using your home a an ATM.” But the real issue, he said, is that “What most people tend to do with the money they pull out of their home is buy consumer-related goods.”

“In essence, it’s increasing consumer debt levels, and that’s what we see as a significant problem in Canada — the rising consumer debt levels,” he said.

The reason for this concern, he says, is what less home equity — and more debt — would mean in the event of a sizeable drop in house prices, which have continued to climb even as the world economy remains on shaky footing.

“Given the extreme run-up in housing prices, there’s a real chance that housing prices can fall back significantly in Canada. That would wipe out the equity people have in their homes,” he said.

After warning about the dangers of HELOCs, The Office of the Superintendent of Financial Institutions said in June that it plans to limit the maximum loan-to-value to 65 per cent, down from 80 per cent.

But Simon equates this and other recent regulatory moves with “trying to close the barn door after the cattle’s gotten out.”

“I definitely feel that there will be a correction in the Canadian housing market,” he said.

Simon predicts that average prices could drop by between 20 and 30 per cent — pointing to the disconnect between house prices and rents in major Canadian cities as a prime indicator of this coming crash.

Based on the recent experience in the U.S., where house prices spiked way above rents at the height of the housing bubble, “We expect that there would be some sort of correction that would bring the housing prices here more in line with rents,” he said.

Not all economists are convinced that these indicators foretell such a dramatic slide, however.

Aron Gampel, deputy chief economist for Scotiabank says regulators are taking strides to avoid a significant correction in housing prices, which could not occur without a significant “trigger,” such as a rapid rise in interest rates, an unlikely scenario.

“The U.S. correction, and ones we’ve seen in other countries occurred during a recession. It was triggered by a financial crisis when the market was already in correction mode,” he said.

“We still have fairly vibrant housing markets here, because the economy is still moving ahead, and we’re still adding jobs, we’re still generating income gains. So I don’t see signs here to expect a significant correction of that magnitude.”

Gampel predicts that prices will come off by about 10 per cent over the next few years, driven by the erosion in affordability in markets like Vancouver and Toronto.

Also on HuffPost:

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  • Canadian Household Debt By Region

  • 6. Atlantic Canada: $69,300

    Number represents the average among those households that carry debt. Source: <a href="http://www.statcan.gc.ca/pub/75-001-x/2012002/article/11636-eng.pdf" target="_hplink">Statistics Canada</a>

  • 5. Quebec: $78,900

    Number represents the average among those households that carry debt. Source: <a href="http://www.statcan.gc.ca/pub/75-001-x/2012002/article/11636-eng.pdf" target="_hplink">Statistics Canada</a>

  • 4. Manitoba & Saskatchewan: $84,900

    Number represents the average among those households that carry debt. Source: <a href="http://www.statcan.gc.ca/pub/75-001-x/2012002/article/11636-eng.pdf" target="_hplink">Statistics Canada</a>

  • 3. Ontario: $124,700

    Number represents the average among those households that carry debt. Source: <a href="http://www.statcan.gc.ca/pub/75-001-x/2012002/article/11636-eng.pdf" target="_hplink">Statistics Canada</a>

  • 2. British Columbia: $155,500

    Number represents the average among those households that carry debt. Source: <a href="http://www.statcan.gc.ca/pub/75-001-x/2012002/article/11636-eng.pdf" target="_hplink">Statistics Canada</a>

  • 1. Alberta: $157,700

    Number represents the average among those households that carry debt. Source: <a href="http://www.statcan.gc.ca/pub/75-001-x/2012002/article/11636-eng.pdf" target="_hplink">Statistics Canada</a>

  • Also On HuffPost:

    THE 10 COUNTRIES DEEPEST IN DEBT

  • 10. United Kingdom

    <strong>Debt as a percentage of GDP:</strong> 80.9 percent <strong>General government debt:</strong> $1.99 trillion <strong>GDP per capita (PPP):</strong> $35,860 <strong>Nominal GDP:</strong> $2.46 trillion <strong>Unemployment rate:</strong> 8.4 percent <strong>Credit rating:</strong> Aaa Although the UK has one of the largest debt-to-GDP ratios among developed nations, it has managed to keep its economy relatively stable. The UK is not part of the eurozone and has its own independent central bank. The UK's independence has helped protect it from being engulfed in the European debt crisis. Government bond yields have remained low. The country also has retained its Aaa credit rating, reflecting its secure financial standing. <a href="http://247wallst.com/2012/02/14/the-tencountries-deepest-in-debt/#ixzz1mSdyJAeo" target="_hplink">Read more at 24/7 Wall St.</a>

  • 9. Germany

    <strong>Debt as a percentage of GDP:</strong> 81.8 percent <strong>General government debt:</strong> $2.79 trillion <strong>GDP per capita (PPP):</strong> $37,591 <strong>Nominal GDP:</strong> $3.56 trillion <strong>Unemployment rate:</strong> 5.5 percent <strong>Credit rating:</strong> Aaa As the largest economy and financial stronghold of the EU, Germany has the most interest in maintaining debt stability for itself and the entire eurozone. In 2010, when Greece was on the verge of defaulting on its debt, the IMF and EU were forced to implement a 45 billion euro bailout package. A good portion of the bill was footed by Germany. The country has a perfect credit rating and an unemployment rate of just 5.5 percent, one of the lowest in Europe. Despite its relatively strong economy, Germany will have one of the largest debt-to-GDP ratios among developed nations of 81.8 percent, according to Moody's projections. <a href="http://247wallst.com/2012/02/14/the-tencountries-deepest-in-debt/#ixzz1mSdyJAeo" target="_hplink">Read more at 24/7 Wall St.</a>

  • 8. France

    <strong>Debt as a percentage of GDP:</strong> 85.4 percent <strong>General government debt:</strong> $2.26 trillion <strong>GDP per capita (PPP):</strong> $33,820 <strong>Nominal GDP:</strong> $2.76 trillion <strong>Unemployment rate:</strong> 9.9 percent <strong>Credit rating:</strong> Aaa France is the third-biggest economy in the EU, with a GDP of $2.76 trillion, just shy of the UK's $2.46 trillion. In January, after being long-considered one of the more economically stable countries, Standard & Poor's downgraded French sovereign debt from a perfect AAA to AA+. This came at the same time eight other euro nations, including Spain, Portugal and Italy, were also downgraded. S&P's action represented a serious blow to the government, which had been claiming its economy as stable as the UK's. Moody's still rates the country at Aaa, the highest rating, but changed the country's outlook to negative on Monday. <a href="http://247wallst.com/2012/02/14/the-tencountries-deepest-in-debt/#ixzz1mSdyJAeo" target="_hplink">Read more at 24/7 Wall St.</a>

  • 7. United States

    <strong>Debt as a percentage of GDP:</strong> 85.5 percent <strong>General government debt:</strong> $12.8 trillion <strong>GDP per capita (PPP):</strong> $47,184 <strong>Nominal GDP:</strong> $15.13 trillion <strong>Unemployment rate:</strong> 8.3 percent <strong>Credit rating:</strong> Aaa U.S. government debt in 2001 was estimated at 45.6 percent of total GDP. By 2011, after a decade of increased government spending, U.S. debt was 85.5 percent of GDP. In 2001, U.S. government expenditure as a percent of GDP was 33.1 percent. By 2010, is was 39.1 percent. In 2005, U.S. debt was $6.4 trillion. By 2011, U.S. debt has doubled to $12.8 trillion, according to Moody's estimates. While Moody's still rates the U.S. at a perfect Aaa, last August Standard & Poor's downgraded the country from AAA to AA+. <a href="http://247wallst.com/2012/02/14/the-tencountries-deepest-in-debt/#ixzz1mSdyJAeo" target="_hplink">Read more at 24/7 Wall St.</a>

  • 6. Belgium

    <strong>Debt as a percentage of GDP:</strong> 97.2 percent <strong>General government debt:</strong> $479 billion <strong>GDP per capita (PPP):</strong> $37,448 <strong>Nominal GDP:</strong> $514 billion <strong>Unemployment rate:</strong> 7.2 percent <strong>Credit rating:</strong> Aa1 Belgium's public debt-to-GDP ratio peaked in 1993 at about 135 percent, but was subsequently reduced to about 84 percent by 2007. In just four years, the ratio has risen to nearly 95 percent. In December 2011, Moody's downgraded Belgium's local and foreign currency government bonds from Aa1 to Aa3. In its explanation of the downgrade, the rating agency cited "the growing risk to economic growth created by the need for tax hikes or spending cuts." In January of this year, the country was forced to make about $1.3 billion in spending cuts, according to The Financial Times, to avoid failing "to meet new European Union fiscal rules designed to prevent a repeat of the eurozone debt crisis." <a href="http://247wallst.com/2012/02/14/the-tencountries-deepest-in-debt/#ixzz1mSdyJAeo" target="_hplink">Read more at 24/7 Wall St.</a>

  • 5. Portugal

    <strong>Debt as a percentage of GDP:</strong> 101.6 percent <strong>General government debt:</strong> $257 billion <strong>GDP per capita (PPP):</strong> $25,575 <strong>Nominal GDP:</strong> $239 billion <strong>Unemployment rate:</strong> 13.6 percent <strong>Credit rating:</strong> Ba3 Portugal suffered greatly from the global recession -- more than many other countries -- partly because of its low GDP per capita. In 2011, the country received a $104 billion bailout from the EU and the IMF due to its large budget deficit and growing public debt. The Portuguese government now "plans to trim the budget deficit from 9.8 percent of gross domestic product in 2010 to 4.5 percent in 2012 and to the EU ceiling of 3 percent in 2013," according Business Week. The country's debt was downgraded to junk status by Moody's in July 2011 and downgraded again to Ba3 on Monday. <a href="http://247wallst.com/2012/02/14/the-tencountries-deepest-in-debt/#ixzz1mSdyJAeo" target="_hplink">Read more at 24/7 Wall St.</a>

  • 4. Ireland

    <strong>Debt as a percentage of GDP:</strong> 108.1 percent <strong>General government debt:</strong> $225 billion <strong>GDP per capita (PPP):</strong> $39,727 <strong>Nominal GDP:</strong> $217 billion <strong>Unemployment rate:</strong> 14.5 percent <strong>Credit rating:</strong> Ba1 Ireland was once the healthiest economy in the EU. In the early 2000s, it had the lowest unemployment rate of any developed industrial country. During that time, nominal GDP was growing at an average rate of roughly 10 percent each year. However, when the global economic recession hit, Ireland's economy began contracting rapidly. In 2006, the Irish government had a budget surplus of 2.9 percent of GDP. In 2010, it accrued a staggering deficit of 32.4 percent of GDP. Since 2001, Ireland's debt has increased more than 500 percent. Moody's estimates that the country's general government debt was $224 billion, well more than its GDP of $216 billion. Moody's rates Ireland's sovereign debt at Ba1, or junk status. <a href="http://247wallst.com/2012/02/14/the-tencountries-deepest-in-debt/#ixzz1mSdyJAeo" target="_hplink">Read more at 24/7 Wall St.</a>

  • 3. Italy

    <strong>Debt as a percentage of GDP:</strong> 120.5 percent <strong>General government debt:</strong> $2.54 trillion <strong>GDP per capita (PPP):</strong> $31,555 <strong>Nominal GDP:</strong> $2.2 trillion <strong>Unemployment rate:</strong> 8.9 percent <strong>Credit rating:</strong> A3 Italy's large public debt is made worse by the country's poor economic growth. In 2010, GDP grew at a sluggish 1.3 percent. This was preceded by two years of falling GDP. In December 2011, the Italian government passed an austerity package in order to lower borrowing costs. The Financial Times reports that according to consumer association Federconsumatori, the government's nearly $40 billion package of tax increases and spending cuts will cost the average household about $1,500 each year for the next three years. On Monday, Moody's downgraded Italy's credit rating to A3, from A2. <a href="http://247wallst.com/2012/02/14/the-tencountries-deepest-in-debt/#ixzz1mSdyJAeo" target="_hplink">Read more at 24/7 Wall St.</a>

  • 2. Greece

    <strong>Debt as a percentage of GDP:</strong> 168.2 percent <strong>General government debt:</strong> $489 billion <strong>GDP per capita (PPP):</strong> $28,154 <strong>Nominal GDP:</strong> $303 billion <strong>Unemployment rate:</strong> 19.2 percent <strong>Credit rating:</strong> Ca Greece became the poster child of the European financial crisis in 2009 and 2010. After it was bailed out by the rest of the EU and the IMF, it appeared that matters could not get any worse. Instead, Greece's economy has continued to unravel, prompting new austerity measures and talks of an even more serious default crisis. In 2010, Greece's debt as a percent of GDP was 143 percent. Last year, Moody's estimates Greece's debt increased to 163 percent of GDP. Greece would need a second bailout worth 130 billion euro -- the equivalent of roughly $172 billion -- in order to prevent the country from defaulting on its debt in March. <a href="http://247wallst.com/2012/02/14/the-tencountries-deepest-in-debt/#ixzz1mSdyJAeo" target="_hplink">Read more at 24/7 Wall St.</a>

  • 1. Japan

    <strong>Debt as a percentage of GDP:</strong> 233.1 percent <strong>General government debt:</strong> $13.7 trillion <strong>GDP per capita (PPP):</strong> $33,994 <strong>Nominal GDP:</strong> $5.88 trillion <strong>Unemployment rate:</strong> 4.6 percent <strong>Credit rating:</strong> Aa3 Japan's debt-to-GDP ratio of 233.1 percent is the highest among the world's developed nations by a large margin. Despite the country's massive debt, it has managed to avoid the type of economic distress affecting nations such as Greece and Portugal. This is largely due to Japan's healthy unemployment rate and population of domestic bondholders, who consistently fund Japanese government borrowing. Japanese vice minister Fumihiko Igarashi said in a speech in November 2011 that "95 percent of Japanese government bonds have been financed domestically so far, with only 5 percent held by foreigners." Prime Minister Yoshihiko Noda has proposed the doubling of Japan's 5 percent national sales tax by 2015 to help bring down the nation's debt. <a href="http://247wallst.com/2012/02/14/the-tencountries-deepest-in-debt/#ixzz1mSdyJAeo" target="_hplink">Read more at 24/7 Wall St.</a>



WHAT $350,000 WILL BUY YOU IN THESE CANADIAN MARKETS
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  • St. John's, Nfld. -- $125 Per Square Foot

    This four-bedroom, two-bathroom custom-built bungalow in St. John's West End neighbourhood boasts hardwood floors, a covered sundeck and an oversized yard. With an asking price of $349,900 and 2,750 square feet of livable space, this spacious home costs approximately $125 per square foot.

  • Trois Rivieres, Que. -- $127 Per Square Foot

    This five-bedroom, two-and-a-half bathroom house features a double-width garage and a heated inground pool. At approximately 2,750 square feet and an asking price of $349,900, it works out to around $127 per square foot.

  • Winnipeg -- $160 Per Square Foot

    This spacious split-level home in southeast Winnipeg features four bedrooms and three baths, a stone fireplace and a jazuzzi in the master bedroom. It sits on a 142-foot-long, pie-shaped lot. At 2,182 square feet and a $349,900 asking price, it works out to around $160 per square foot. <strong>CORRECTION:</strong> <em>An earlier version of this slide incorrectly listed the price-per-square foot as $600</em>.

  • Red Deer, Alta. -- $248 Per Square Foot

    This five-bedroom, three-bath home features vaulted ceilings, a fireplace and a massive walk-in closet in the master bedroom. At 1,408 square feet -- this average-sized house on the prairie works out to $248 per square foot.

  • Montreal -- $250 Per Square Foot

    This two-story townhouse condo just east of downtown Montreal features three bedrooms and two baths, cherry wood floors and a terrace. At 1,400 square feet and an asking price of $349,000, this condo works out to $250 per square foot.

  • Burlington, Ont. -- $388 Per Square Foot

    This cozy bungalow on the edges of the Greater Toronto Area features four bedrooms, two baths and a long, 175-foot lot. Highlights include a granite countertop and newly finished hardwood floors. At a snug 900 square feet, this house is going for $388 per square foot.

  • Toronto -- $499 Per Square Foot

    This one-bedroom, one-bath condo in Toronto's Entertainment District features a balcony with a southeast exposure. In a sure sign the condo is outfitted with just the basics, the unit's sellers boast of its "brand name appliances" and "frost free refrigerator." At 700 square feet (including the balcony), it works out to $499 per square foot.

  • Vancouver -- $688 Per Square Foot

    This one-bedroom, one-bathroom corner unit in Vancouver's Kitsilano neighbourhood "shows much larger than the square footage," the realtor boasts. That's good, because at 508 square feet, this place is only slightly larger than some of the bedrooms and living rooms available in similarly-priced houses in other markets. The condo boasts "gorgeous mountain views," but it'll cost you -- $688 per square foot.