Canada’s banks appear to be aligned in the opinion that the housing market will lose momentum over the next year but avoid a hard landing. However, some financial institutions still fear that trouble could be on the horizon for the Canadian market.
In its annual Global Wealth Report published today, Credit Suisse referenced Canada’s rising household debt levels as a source of concern over the health of the country’s housing market.
“Mortgage terms were tightened in 2012 and the market cooled somewhat, but there are continuing concerns,” the report said.
“It is not clear whether the final landing will be soft or hard.”
The shudder-inducing words come on the heels of a fairly positive September sales report released this week by the Canadian Real Estate Association. Canadian home sales rose 0.8 per cent in September over August and 18.2 per cent over September 2012.
Following the CREA report, RBC, TD and Scotiabank all published briefs noting the market’s apparent vitality through the summer and into September, but cautioned that momentum would slow into 2014 as mortgage rate hikes take effect.
BMO’s Senior Economist Robert Kavcic went one further, dismissing concerns of a steep market correction outright, calling any worry about a hard landing for Canadian housing “a faint memory.”