The Canadian economy is all but certain to register a technical recession in the 2nd quarter. Last week global stock markets took a violent tumble and made a sharp rebound that rattled many investors. Yet Canada's housing market continues to ignore the world around it and defy gravity.
Two recent surveys are not predicting any slowdown until next year. Both cite interest rate activity as the key trigger for any change.
A poll by Reuters projects home prices will increase by an average of 5.2% across the country this year. That's up sharply from the 3.4% boost projected back in June.
The Reuters economists do see a slowdown coming in 2016 and 2017, but they have upgraded their forecasts for both of those years. The expectation is that interest rate hikes, led by the U.S. Fed, will decrease housing affordability while also making other goods and services more expensive.
A survey by one of Canada's big banks also points to interest rates as the key factor in any housing slowdown. It forecasts the Bank of Canada will increase its key rate by 75 basis points in the second half of 2016.
The bank sees that slowing price growth on a national basis, with some local market segments, like condos in Montreal, actually experiencing price declines.