A majority of Canada's major cities will see falling single-family home prices over the next five years, including slight price declines in once-hot Vancouver, according to a forecast from Moody's Analytics.
But that won't include Toronto. Despite the city's detached homes being 60 per cent overvalued, a shortage of supply and an influx of wealth into the region will mean prices in Canada's largest city will continue to grow, though at a slower pace, the risk analysis firm predicted.
While Calgary, Montreal and Vancouver will experience slightly falling house prices over the next five years, cities such as Edmonton, Quebec City, Regina, Saskatoon and Winnipeg are expected to see more significant declines in single-family home prices, the forecast stated.
Carbacho-Burgos estimated that Toronto house prices are overvalued by 60 per cent compared to the long-run trend, while in Vancouver they are about 50-per-cent overvalued.
But unlike Toronto, Vancouver will see slight price declines over the next five years, falling an average of 0.3 per cent per year.
"With higher mortgage rates and restrictions on speculative purchases and foreign purchases, Vancouver's housing market can ... expect approximately level house prices over the coming five years," Carbacho-Burgos wrote.
Montreal will experience outright house-price declines, thanks to "slower demographics" than in other Canadian cities, the report predicted.
The forecast sees an absolute housing bust in St. John's, Nfld., predicting detached house prices there will fall by more than six per cent per year, between now and 2022.
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