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51 Trolley Cres., Toronto.

Keller Williams Referred Urban Realty

November appears to be a patchy month in Toronto-area real estate, with many agents reporting a stillness descending. Interest from potential sellers also appears to be waning as people start to anticipate the holiday season.

But entry-level properties are still selling at a brisk pace and some luxury listings are also sparking competition.

Last week, two contenders vied for a ravine property with an asking price of $4.5-million in the posh enclave of Moore Park.

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At the end of the evening set for reviewing offers, the five-bedroom house at 67 Ridge Dr. sold for 5 per cent above the asking price.

This week, real estate agent Kenneth Yim of Keller Williams Referred Urban Realty recently drew five offers for his own condo unit at 51 Trolley Cres.

Keller Williams Referred Urban Realty

Real estate agent Kenneth Yim's condo, which drew five offers, sold for $1.13-million

Keller Williams Referred Urban Realty

The condo near King Street East and River Street had an asking price of $999,900 and sold for $1.13-million. Mr. Yim says three of the offers came in above $1.1-million.

Both of those properties offered buyers something out of the ordinary: The ravine setting on Ridge Drive and the terrace on Trolley Crescent. Some other houses and condo units are taking longer to sell.

The slight hesitation that some agents are reporting may be inspired in part by the Bank of Canada’s recent interest-rate hike. There’s also some trepidation surrounding the global economy with tricky matters, such as Brexit, to work out.

The U.S.-based investment firm Vanguard Group is keeping an eye on global housing markets with that backdrop in mind.

Vanguard says the rapid growth in house prices since 2013 has added to fears of recession in some of the world’s major markets.

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While many markets appear highly valued, Canada and Australia stand out for the rich cost of housing coupled with high levels of household debt, according to Vanguard, which compared those two high fliers with the United States and Britain.

But despite the large number of Canadians facing rising interest rates and a heavy debt burden, Vanguard doesn’t foresee a calamitous collapse for the country’s real estate markets.

The analysts concluded that the risk of a severe correction – which they define as an unravelling in the space of one year that causes an economic shock or recession – is low for Canada and the other three countries.

Among the four, the ratio of house prices to income is highest in Canada.

Vanguard says housing supply, low interest rates and foreign investment helped push real estate prices up 24 per cent nationwide over the past three years.

Todd Schlanger, senior investment strategist at Vanguard Investments Canada Inc., says those forces are shifting gears.

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“We’re seeing moderation in them.”

According to Mr. Schlanger, a move in Canada’s interest rates to a normalized level could keep a lid on house prices.

Mr. Schlanger is predicting the Bank of Canada will raise interest rates three times, then hit pause by about the middle of 2019.

As a result of higher rates, highly indebted Canadians may struggle. A diminished-wealth effect will take some of the steam out of consumer spending, he expects, and rate increases may lead to larger monthly payments for many households.

“That’s going to mean less discretionary spending, most likely,” he says.

Mr. Schlanger points out that consumer spending has been contributing a huge chunk to Canada’s gross domestic product.

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“This is one area where we feel the risks have been a bit underappreciated,” he says.

The higher rates in 2018 compared with 2017 also add to the risk of an economic slowdown, Mr. Schlanger cautions, but he is not too concerned.

“The risk of a recession this year compared [with] last is higher, but not our base case,” he says.

Demographics are changing as well, according to the study. Vanguard expects population growth to slow to 3.3 per cent after hovering around 4 per cent for the past two decades.

Looking at commodity prices and a slowdown in global trade, Mr. Schlanger sees signals that global growth will moderate.

Vanguard adds the caveat that forecasting peaks or troughs in the real estate market is as challenging as predicting recessions, and investors should be prepared for a variety of scenarios that range from house prices continuing their climb at one end to prices sharply correcting in the space of one year at the other.

That more grim scenario would likely tip the country into economic recession, they warn.

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