Business

Harper dismisses reports of a Canadian housing bubble

Prime Minister Stephen Harper says Canada is not facing a housing crisis, despite analyst fears that the market may be on the verge of a serious decline.

Analyst is predicting crash that could cut home prices in half

Prime Minister Stephen Harper takes part in a question and answer session at Goldman and Sachs in New York on Wednesday. He says he's not afraid of a housing bubble in Canada. (Sean Kilpatrick/Canadian Press)

Prime Minister Stephen Harper says Canada is not facing a housing crisis, despite analyst fears that the market may be on the verge of a serious decline.

In a forthcoming book, Hilliard MacBeth, a well-respected Edmonton-based securities analyst, warns that "Canadians have far too much of their investment capital and savings tied up in expensive real estate," according to a promotional outline of the book. 

In an interview published in the Globe and Mail today, MacBeth predicts a serious crash in house prices as soon as this coming spring, and advises people with large mortgages to sell, and rent.. His book, When the Bubble Bursts, forecasts a drop of up to 50 per cent in housing prices.

But Harper told a New York business audience that he did not anticipate a housing crisis in Canada, and that that there was no comparison between the Canadian housing market now and the U.S. market before the crash of 2008.

He said only  small percentage of Canadian households would be vulnerable to interest rate hikes or a downturn in prices.

MacBeth disagreed, saying real estate should not be regarded as a sure investment and a crash is necessary to bring debt levels into line.

He also advised people to sell their condos.

"Condos are a terrible investment," said MacBeth, who will be a guest next week on The Exchange with Amanda Lang. "They’re not even an investment at all." 

Other analysts agree with the prime minister that there is nothing to worry about, including the head of Canada Mortgage and Housing Corporation Evan Siddall.

"Despite some overvaluation," Siddall told a Montreal audience last week, "there are no immediate problematic housing market conditions at the national level."

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