Mumal Rathore | Reuters | from

High prices mean "the Canadian housing market's major shift from homeownership to rental continues," Laurentian's chief economist says.

(Reuters) — Canada's once-roaring housing market has been tamed, according to the latest Reuters poll of analysts who predict house prices will rise nationally and in key urban hot spots they will not outstrip overall inflation over the next two years.

While a mild price correction has already taken place in Toronto, Canada's largest city, and is underway in Vancouver, the latest survey of 20 analysts nationwide taken Feb 13-21 puts the chances of a national correction at just 20 per cent.

House prices are forecast to rise just 1.1 per cent this year on an average basis, followed by 1.9 per cent in 2020 and then 3 per cent in 2021, based on a smaller sample of contributors willing to look that far into the future.

The outlook for Toronto is nearly identical at 1.3 per cent, 2.0 per cent and 3.5 per cent, with Vancouver likely down 1.0 per cent this year, then up 0.2 per cent next year and 3.0 in 2021.

One of the main reasons for the change from years of price rises and speculative frenzy in some of Canada's large cities is demand, not just supply concerns or the still-cheap cost of taking out a mortgage.

"The Canadian housing market's major shift from homeownership to rental continues," noted Sebastien Lavoie, chief economist at Laurentian Bank Securities.

"The stars are aligned for further strengthening in activity in the rental market: demand coming from atypical jobs and immigration, higher rates restraining some households to buy a home, the preference of millennials to delay the purchase of a home later in their life cycle."