Canada's housing market boom will fade out over the next three years and although analysts say prices won't fall from record highs most are at least somewhat worried about the risk of a crash, a Reuters poll found.
In the survey of 16 forecasters, eight said they were "slightly concerned" that after more than a decade of rapid increases in home prices, they may be at risk of a sharp fall.
Two respondents from the sample of top property market analysts and senior economists at Canada's largest banks said they were "concerned" while three said they were "very concerned". Only three said they were not concerned at all.
Still, the consensus contains no house price fall over the next three years. Instead, they are expected to rise 2.2 percent this year, 1.0 percent in 2015 and 0.8 percent in 2016.
"Outside of Toronto and Calgary, the housing market is largely cooling, though far from crashing," said Sal Guatieri, senior economist at BMO Capital Markets.
Canada's housing market weakened a bit in 2009, hit by the global financial crisis, but record low borrowing costs and a pick-up in the economy helped it bounce back quickly, booming again by 2012.
Lofty prices and record-high consumer debt have since raised fears that once interest rates rise again, Canada's housing market could be in for a collapse like the one the United States suffered during the crisis.
Meanwhile, household debt keeps piling up. The ratio of Canadian household debt to income rose to a record high of 163.7 percent in the third quarter.
By comparison, U.S. household debt, although on the rise, remains well below its 2008 peak and reflects the extensive deleveraging by households after the housing market collapse and the financial crisis.
Concerns of a similar crash in Canada prompted the government to intervene four times to tighten mortgage rules, which helped rein in the market during 2012, but the latest Teranet-National Bank data showed home prices hit another record high in January.
Most respondents in the poll said that homes in Canada are overpriced, particularly in Toronto and Vancouver.
Rating home prices on a scale of 1 to 10 where 1 is extremely cheap and 10 is extremely expensive, analysts put Canada at 6.5, while Toronto scored a 7.3 and Vancouver was given an 8.0.
A similar poll on the British housing market also rated London house prices, where a supply shortage and a flurry of foreign investment has driven prices up sharply, an 8.0.
House prices in Toronto, Canada's biggest city, are seen rising 3 percent, more than the rest of the country. But that will slow to 0.8 percent in 2015 and flatline in 2016.
On the west coast, Vancouver's housing market is expected to see prices rise by 2 percent in 2014, before declining 0.7 percent the next year and falling 1.2 percent in 2016.
The five analysts who predicted outright declines in home prices saw a median 12.5 percent fall.
"We think it is a housing bubble. The symptoms are overvaluation, overbuilding and excessive household debt," said David Madani, economist at Capital Economics, who is predicting a 25 percent drop in prices on a long-term basis, by far the most bearish forecast in the poll.
The poll also found that the pace of new home building is expected to slow, with housing starts moving from an average annualized rate of 184,000 in the current quarter to 174,000 in the first quarter of 2015.
(Polling by Deepti Govind; Editing by Ross Finley and James Dalgleish)