Canadian house prices to remain flat for 10 years, predicts TD Bank

OTTAWA – A TD Bank research report is warning that Canada’s real estate bonanza has come to an end and predicts home prices will be essentially flat for the next decade.

The TD report forecasts average house prices will move lower over the next few years before modestly rebounding after 2015.

But even with the rebound, TD predicts that home price increases will only rise about two per cent annually — essentially keeping pace with inflation.

That’s the weakest rate of growth for Canadian home prices since 1980 and far below the seven per cent annual price gain seen over the last 10 years.

The bank (TSX:TD) says new, tighter rules for borrowers and lenders are only part of the reason for the moderating prices.

Other contributing factors include the aging population, modest growth in population and the economy and, eventually, higher interest rates.