There’s a 40% chance Canadian home prices level off, expert says — but how about a crash?

The top economist at RBC’s investor division has estimated the chances of the three possible and very different outcomes for Canadian home prices.

Put simply, the options are “up, sideways, or down,” but Eric Lascelles, the chief economist for RBC Global Asset Management, gets more specific.

“The most likely outcome… is that home price gains slow to a snail’s pace or even go sideways,” writes Lascelles in his April 24-28 #MacroMemo published on professional social media site LinkedIn.

Lascelles estimates there’s a 40 per cent chance of this happening, and says “this is certainly what regulators desire,” nodding to Ontario’s Fair Housing Plan, unveiled last week.

In this scenario, the downturn in housing activity and prices would shave off a few percentage points from the national GDP over several years, Lascelles states.

As it stands, the housing market generates roughly 15 per cent of the Canadian GDP, whereas 10 per cent would be “normal.”

Policymakers have been busy trying to tamp down what many observers agree is unsustainable growth in Canada’s hottest housing markets.

The Fair Housing Plan is a 16-point policy, largely meant to calm housing markets around southern Ontario, including the Greater Toronto Area’s, the most active in the country.

Greater Toronto Area home prices averaged $916,567 in March, up 33.2 per cent annually, according to the Toronto Real Estate Board, a consistent opponent of intervention to curb demand.

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