![\"\"](\"https:\/\/www.livabl.com\/articles\/wp-content\/uploads\/2018\/10\/JPbombales-1656-compressed.jpg\")
<\/a><\/p>\nPhoto: James Bombales<\/em><\/p>\n After a period of cooling earlier in the year, plenty of headlines have focused on a rebound in the Canadian housing market over the past quarter. But according to a new report, industry watchers should prepare for a period of \u201cslower price growth\u201d over the next five years.<\/p>\n That\u2019s because a rising interest rate environment should keep housing prices from climbing too quickly, according to the latest forecast from Moody\u2019s Analytics and RPS Real Property Solutions.<\/p>\n\n \u201cThe [Bank of Canada] will continue to tighten short-term interest rates through 2020 in order to head off inflation,\u201d writes Moody\u2019s economist Andrew Carbacho-Burgos, in the report. \u201cWith some lag, monetary tightening will pull up mortgage rates.\u201d<\/p>\n The projection also reviewed which Canadian housing markets are over and undervalued. Coming in first was Toronto, which Moody\u2019s believes is overpriced by 51 per cent, a 2 per cent drop from May. Meanwhile, Vancouver was considered overpriced by 40 per cent.<\/p>\n Undervalued cities included Edmonton, which Moody\u2019s considers to be underpriced by 20 per cent, while most Atlantic cities are listed as \u201cmoderately undervalued.\u201d<\/p>\n \u201cThe national housing market still has a long way to go before it regains the level of affordabil\u00adity it had before 2015, when prices in Toronto and Vancouver took off, but has now taken the first steps to do so,\u201d writes Carbacho-Burgos. \u201cThe important points are, first, that there is no serious projected house price correction,\u201d he added.<\/p>\n