Canada's housing market boom will fade out over the next three years and although analysts say prices won't fall from record highs most are at least somewhat worried about the risk of a crash, a Reuters poll found.
In the survey of 16 forecasters, eight said they were "slightly concerned" that after more than a decade of rapid increases in home prices, they may be at risk of a sharp fall.
Two respondents from the sample of top property market analysts and senior economists at Canada's largest banks said they were "concerned" while three said they were "very concerned". Only three said they were not concerned at all.
Still, the consensus contains no house price fall over the next three years. Instead, they are expected to rise 2.2% this year, 1.0% in 2015 and 0.8% in 2016.
Canada's housing market weakened a bit in 2009, hit by the global financial crisis, but record low borrowing costs and a pickup in the economy helped it bounce back quickly, booming again by 2012.
Lofty prices and record-high consumer debt have since raised fears that once interest rates rise again, Canada's housing market could be in for a collapse like the one the United States suffered during the crisis.
Meanwhile, household debt keeps piling up. The ratio of Canadian household debt to income rose to a record high of 163.7% in the third quarter.
By comparison, U.S. household debt, although on the rise, remains well below its 2008 peak and reflects the extensive de-leveraging by households after the housing market collapse and the financial crisis.
Concerns of a similar crash in Canada prompted the government to intervene four times to tighten mortgage rules, which helped rein in the market during 2012, but the latest Teranet-National Bank data showed home prices hit another record high in January.
Most respondents in the poll said that homes in Canada are overpriced, particularly in Toronto and Vancouver.
Rating home prices on a scale of one to 10 where one is extremely cheap and 10 is extremely expensive, analysts put Canada at 6.5, while Toronto scored a 7.3 and Vancouver was given an 8.0.
A similar poll on the British housing market also rated London house prices, where a supply shortage and a flurry of foreign investment has driven prices up sharply, an 8.0.
House prices in Toronto, Canada's biggest city, are seen rising 3%, more than the rest of the country. But that will slow to 0.8% in 2015 and flatline in 2016.
On the west coast, Vancouver's housing market is expected to see prices rise by 2% in 2014, before declining 0.7% the next year and falling 1.2% in 2016.
The five analysts who predicted outright declines in home prices saw a median 12.5% fall.
The poll also found that the pace of new home building is expected to slow, with housing starts moving from an average annualized rate of 184,000 in the current quarter to 174,000 in the first quarter of 2015.
