Canadian home prices to drop 15% on back of mortgage rate rise: Sun Life

Thursday, September 12th, 2013

Katia Dmitrieva and Theophilos Argitis

Canadian home prices will drop 10% to 15% “over time” as mortgage rates rise and supply swells, said Sadiq Adatia, chief investment officer of Sun Life Global Investments Inc.

 “I don’t think the demand is going to be there for housing,” Adatia, who manages about $6.4-billion at Sun Life Global, a unit of Sun Life Financial Inc.

The recent upswing in housing activity is being driven by buyers rushing in as banks raise borrowing costs, Adatia said Thursday at the Bloomberg Canadian fixed-income conference in New York.

“I do think it’s a dead cat bounce,” he said.

Home sales surged in Canada’s two largest markets in August. Sales rose 21% to 7,569 units in Toronto from a year ago, according to the Toronto Real Estate Board, and Vancouver existing home sales surged 53%, said that city’s real estate board.

© 2013 National Post

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