Canada’s housing price boom is ‘turning to bust’

Canada’s economic growth will slow dramatically “as the housing boom turns to bust”, a leading forecasting firm has warned.

Capital Economics said the country’s housing investment boom is the biggest on record, but it fears “the housing bust over the next two years could cost as much as 3.5% of GDP”.

Based on affordability, it estimates Canadian residential property is overvalued by up to 40%, meaning its property bubble is “worse than the peak of the US housing bubble”.