The coming year could be turnaround time for Toronto’s housing and rental markets.

With a surprisingly unpredictable 2013 coming to an end, economists are weighing in on what the future could hold. While opinions vary somewhat, there seems general agreement that house price gains will slow — if not slip by the end of 2014 — and the rental vacancy rate should edge up slightly as a record number of new condos come on the market.

But forget all those fears about a housing bubble that’s about to burst, says Helmut Pastrick, chief economist of Central 1 Credit Union.

He expects Toronto resale house prices to continue to climb by a more modest, but still healthy, 4 to 5 per cent through 2016 and double over the next 25 years fuelled by a shortage of land for new development and rising population levels.

“Housing in Toronto is expensive but not overvalued, especially from a long-term perspective,” Pastrick said in a forecast released Thursday. “Today’s record high prices will seem inexpensive in 25 years.”

But affordability will become a worsening problem, he warned.

Toronto region house prices rose to a seven-month high of 4.2 per cent in November, over a year earlier, according to Teranet-National Bank house index price numbers also released Thursday.

Those gains were pushed along by a surge of summer buying from house hunters panicked by that interest rates were on the rise.

While that spending spree has already shown signs of a letup, demand for houses continues to outstrip supply which could see Toronto price gains “temporarily rise” to as much as 7 per cent, year over year, in early 2014, says Amna Asaf of Capital Economics.

But look for those gains to taper off in the second half of next year: “If we are right, and sales fall further, then house prices will eventually decline,” added Asaf.

Rental demand and the vacancy rate across the Toronto Census Metropolitan Area was 1.6 per cent in October, essentially the same as the 1.7 per cent rental vacancy rate a year earlier, says the Canada Mortgage and Housing Corp. in its Fall Rental Market Survey released Thursday.

“Strong demand from young adult households and few renter households moving to home ownership” have both contributed to a healthy rental market, says Ed Heese, CMHC’s senior market analyst for Toronto.

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But the vacancy rate for rental condominiums actually climbed as of October to 1.8 per cent, up from 1.2 per cent a year earlier, because of the number of new units coming on the market, he notes.

Market conditions remained tight enough up to October, however, that rents for an average two-bedroom unit were up 3 per cent, year over year.