XPost: can.politics, ab.politics   
   From: tw1161331@tweaknews.eu   
      
   Not home sellers.  But home buyers.  Time they got a break.   
   _________________________________________________________   
   Tue Feb 24, 2015   
      
   Oil price crash raises risk of Canada housing market correction: Reuters poll   
      
   (Reuters) - The recent collapse in oil prices has heightened risks that   
   Canada's long housing boom is due for a correction, according to a Reuters   
   poll.   
      
   Nearly three-quarters of forecasters polled said the chances of a sharp fall   
   in home prices have risen compared with three months ago. Most said the plunge   
   in the price of crude oil would be the most likely trigger for a housing   
   correction.   
      
   Still, a majority of analysts said house prices falls are likely to be limited   
   to the provinces in Western Canada that depend heavily on oil extraction,   
   production and export.   
      
   After nearly doubling over the past decade, average home prices in Canada are   
   expected to rise more slowly this year and next, while homebuilding could also   
   cool from elevated levels.   
      
   House prices are expected to rise 1.8 percent in 2015 and 1.0 percent in 2016,   
   according to the poll.  That's a sharp drop from the 5.2 percent and 2.0   
   percent growth predicted in November, as forecasters price in the full extent   
   of damage.   
      
   Construction of new houses will likely fall to a $180,900 unit seasonally   
   adjusted annual rate by the end of the year from $185,000 at the start,   
   roughly unchanged from the previous poll.   
      
   "Commodity intensive provinces are expected to undergo a pronounced   
   correction.  Employment and incomes will be hit, exacerbating the household   
   imbalance risk," said Mazen Issa, senior Canada macro strategist at TD   
   Securities.   
      
   Oil and gas products account for roughly 10 percent of Canada's gross domestic   
   product and over one-quarter of its exports.  The recent drop in prices of the   
   commodity prompted the Bank of Canada to cut its benchmark rate by 25 basis   
   points to 0.75 percent in January, a move that caught markets off guard.   
      
   As an insurance against further economic weakness, the central bank hinted at   
   further policy easing, despite Canada's relatively high household   
   debt-to-income levels.  On average, Canadians hold debt worth over 1.5 times   
   their income.   
      
   While respondents in the poll said over-indebted households should not prevent   
   the central bank from cutting rates further, Scotiabank's Adrienne Warren said   
   the risk bears watching.   
      
   "Historically low borrowing costs will continue to support housing   
   affordability and housing demand.   However, high household debt burdens have   
   increased the vulnerability of households and the housing market in the event   
   of a negative economic or financial market shock, including a sharp rise in   
   unemployment or interest rates," she said.   
      
   The bank is expected to cut rates again in March or April, putting them at   
   0.50 percent by the end of the year.  It is still expected to start raising   
   rates next year, though, ending 2016 at 1.25 percent.   
      
   --- SoupGate-Win32 v1.05   
    * Origin: you cannot sedate... all the things you hate (1:229/2)