Canadian housing market overvalued by as much as 20 percent -IMF

Wed Nov 26, 2014 11:09am EST
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OTTAWA Nov 26 (Reuters) - Canada's housing market is overvalued by as much as 20 percent but is likely to achieve a soft landing, the International Monetary Fund said on Wednesday.

IMF official Hamid Faruqee said national home prices in Canada were between 5 percent and 20 percent higher than fundamentals suggest they should be. Faruqee noted that authorities might need to tighten mortgage rules further to avoid a crash.

He also said the housing market would be jeopardized if rates rose sharply but that the IMF foresees only a gradual increase. (Reporting by Randall Palmer in Ottawa; Writing by Andrea Hopkins and Jeffrey Hodgson; Editing by Lisa Von Ahn)