Poll: Canada's roaring housing market set to cool, but only a bit

Canada’s roaring housing market is likely to cool off a bit later this year and into next thanks to government measures aimed at cooling demand in major cities, and the prospect of higher interest rates, a Reuters poll showed.

But there are few signs yet that the recent sharp slowdown in activity and price falls in Toronto, the financial capital, is set to spread nationally, at least not until interest rates rise further from near-record lows.

Having climbed in nearly a straight line over the past decade on cheap credit and robust demand from home and abroad, Canada’s property market - now a driver of economic growth - is forecast to generate 8 per cent house price inflation this year.

That forecast is barely down from 9 per cent in a poll conducted in May. House price inflation is due to ease further to 3 per cent in 2018, according to the quarterly Reuters survey of a few dozen analysts, including all of Canada’s big banks.

Tighter provincial government rules aimed at two of Canada’s biggest cities, Vancouver and Toronto, including a foreign buyers tax, and the hefty deposit withdrawal at Canada’s biggest non-bank lender, Home Capital Group, earlier this year, has poured a bit of cold water on the market.

The Bank of Canada also raised interest rates by 25 basis points in July - its first in nearly seven years.