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February 15, 2010

The price of a house in Canada are more likely to fall – than to climb – in the next few years, says former Bank of Canada Governor David Dodge.

Real estate prices “look pretty high by any conventional measure,” the Globe cited Dodge as saying in the interview. “So, the likelihood of house prices falling a bit over the next few years is probably somewhat greater than that they would rise over the next few years.”

Strong words from the ex-BofC-Gov.. Check out what else he had to say in the Globe and Mail:

“Whether there’s a bubble or not you can only see after the fact,” he added. But it wouldn’t take a bubble bursting to cause consumers pain. If your house price goes down 10 per cent and you’ve borrowed 95 per cent of its value, all of a sudden you’d be in hot water, Mr. Dodge noted.

What about growth? Dodge says Canada has probably entered “a fairly long period of relatively slow income growth,” which will curtail housing activity.

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