Boogich via Getty Images An apartment complex in Montreal. Canada's house price growth will be subdued in the coming years, but there will be upward pressure on the rental market, experts say.

House prices are forecast to rise just 1.1 per cent this year on an average basis, followed by 1.9 per cent in 2020 and then 3 per cent in 2021, based on a smaller sample of contributors willing to look that far into the future.

While a mild price correction has already taken place in Toronto, Canada's largest city, and is underway in Vancouver, the latest survey of 20 analysts nationwide taken Feb 13-21 puts the chances of a national correction at just 20 per cent.

(Reuters) — Canada's once-roaring housing market has been tamed, according to the latest Reuters poll of analysts who predict house prices will rise nationally and in key urban hot spots they will not outstrip overall inflation over the next two years.

The outlook for Toronto is nearly identical at 1.3 per cent, 2.0 per cent and 3.5 per cent, with Vancouver likely down 1.0 per cent this year, then up 0.2 per cent next year and 3.0 in 2021.

One of the main reasons for the change from years of price rises and speculative frenzy in some of Canada's large cities is demand, not just supply concerns or the still-cheap cost of taking out a mortgage.

"The Canadian housing market's major shift from homeownership to rental continues," noted Sebastien Lavoie, chief economist at Laurentian Bank Securities.

"The stars are aligned for further strengthening in activity in the rental market: demand coming from atypical jobs and immigration, higher rates restraining some households to buy a home, the preference of millennials to delay the purchase of a home later in their life cycle."

Asked about the risks to a market that now looks broadly stable, analysts cited an economic slowdown as the biggest, followed by higher mortgage rates.

Sal Guatieri, senior economist at BMO Capital Markets, says incomes in many regions of the country are likely to rise faster than house prices. That follows many years of property prices outstripping income gains by many multiples.

Single-family homes are set to become more affordable this year, according to a strong majority of respondents.

The Reuters survey results are the latest evidence suggesting many closely watched housing markets around the world have come off the boil as expectations for the health of the global economy started to turn. A companion survey on Britain also published on Friday was even more subdued.

Interest rate hikes to slow down

Prospects for an extended period of modest price rises and property market activity are also conveniently timed for what appears to be a sharp change in interest rate expectations from major central banks.

With the U.S. Federal Reserve on hold after an abrupt shift in policy guidance, policymakers at the Bank of Canada (BoC) will feel the pressure to slow down or halt future rate increases.

BoC Governor Stephen Poloz on Thursday indicated he was in no rush to resume monetary tightening, saying while interest rates needed to move up into a neutral range over time the path back was now "highly uncertain."

The overnight rate is currently 1.75 per cent, well below the bottom end of what the BoC considers to be a neutral range of 2.50 per cent to 3.50 per cent, where policy is no longer stimulative.

"The Canadian housing market's major shift from homeownership to rental continues."Sebastien Lavoie, chief economist, Laurentian Bank Securities

"The Bank of Canada is likely thinking about the long-term objective of diminishing the excessive risk taken by households on the mortgage market," said Laurentian's Lavoie.

"The trade-off has to be gentle because in the short term borrowers need to refinance their mortgages at higher rates than before as well. Thus, it is a short-term pain, long-term game tradeoff for the BoC relative to housing."

Recent Reuters polls on Canada's housing market have been broadly accurate. A poll published in December 2017 correctly predicted the slowdown in price rises last year, partly due to changes in mortgage rules in an effort to tame the market.

That poll predicted a 1.9 per cent average national house price rise last year, with subsequent surveys predicting an outcome around that number. The latest figure available was zero per cent.

(Reporting and polling by Mumal Rathore in Bengaluru; Writing by Ross Finley in London; Editing by Jeffrey Benkoe)