Nick Axford (pictured top), of Avison Young, told Canadian Mortgage Professional that while a further correction was likely to transpire in Canada’s housing market, a repeat of past crises didn’t appear on the cards.

“We’re not looking at anything on the scale of the financial crisis or the slowdown during the pandemic. So we need to bear that context in mind,” he said. “But yes, I think it’s widely recognized that the Canadian housing market was overvalued, that house prices were too high. We have seen a correction coming through.”

What’s in store for Canada’s economy for the rest of 2023?

Oxford Economics has projected in recent months that a further correction is probably on the way for global housing markets, with Axford noting that high interest rates, steeper mortgage costs and household debt are likely to slow activity further.

That should feed into slower economic growth and lower consumer expenditure – although consumers around the world have generally held up “incredibly well” in the face of interest rate hikes, Axford added, with robust labour markets keeping consumer confidence at a reasonably high level.

There’s a positive and a negative to that: while signs from the housing market in the early months of the year suggest that the eventual correction may not be as sharp as people might have predicted, that optimism also ricochets into consumer confidence and spending, Axford said, feeding through in turn to inflation.