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Housing prices expected to cool starting in 2016 and beyond: TD

Housing prices are expected to cool starting next year – with the biggest hit coming to homeowners in B.C. and Ontario, TD Economics predicts.

B.C. and Ontario have had some of the largest housing price increases so these provinces will feel the biggest impact, economist Brian DePratto told BNN.ca in a phone interview.

“This is more of a pause, rather than a crash,” he said.

A dip in home prices between 1 percent and 3 percent is expected over the next two-and-a-half years across Canada, he wrote in a report released on Tuesday.

For a housing crash to take place, DePratto argues that the unemployment rate would need to rise to the 8-to-9-percent range from its current 7 percent, and/or a significant recession would need to be underway. He doesn’t expect either of these conditions to materialize.

DePratto also said doesn’t expect the housing price decline to be a significant drag on Canada’s economy when balanced against other drivers of economic growth, like a recovering export market.

He estimates weakening housing prices to shave 0.2 percentage points from Canada’s GDP over 2016 and 2017, but economic growth will then stabilize.

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