A new report suggests sky-high housing prices in Vancouver could fall more than 21 per cent if foreign investment ebbs or interest rates climb.

The report from BMO Economics says overpriced homes in some Canadian cities, along with elevated household debt, suggest the real estate market is vulnerable to a correction — especially in Vancouver.

It says past housing corrections saw Vancouver home values fall an average of 21 per cent. Prices are even higher today, averaging $815,000 in April, making the market even more susceptible.

The report says housing costs in Vancouver now eat up 11.2 times of median family income. The Canadian average is 5.1 times median family income — a historically high level as average Canadian home prices have more than doubled in the past 10 years.

BMO says current prices suggest that even a modest increase in interest rates will slow the market in coming years.

Some triggers that could set off a broader collapse include a rapid rise in interest rates, a sharp increase in unemployment or a slowing of foreign investment.