Canadian economy ‘vulnerable’ to overheated housing market, IMF warns

December 24, 2011

Canada’s average home price is about 10 per cent higher than models suggest it should be, posing a “vulnerability” to the country’s economic outlook, the International Monetary Fund warns in a new report.

A drop in prices would be a blow to already highly indebted consumers. With household debt at record levels of about 150 per cent of disposable income, the domestic spending boom that helped Canada weather the financial crisis already is at its limits. View homes for sale in Vancouver.

The IMF, in its annual report on Canada’s economy, estimates that a 10-per-cent decline in housing prices could result in a 1.1-per-cent drop in personal consumption, excluding durable goods, which would correspond to a 0.5-per-cent loss in gross domestic product.

Read the full report.


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