Bank warns household debt also a hazard.

Overvalued housing markets in several Canadian cities and high household debt poses a "clear and present danger" to Canada’s economy, TD Bank warned in a report Friday.

The study by the bank’s chief economist, Craig Alexander, proposes the government introduce measures to keep personal debt levels from rising further.

The report flags Vancouver as the market with the greatest risk of a housing price correction, because of an influx of foreign buyers, likely in the order of 10 to 15 per cent.

Toronto could also see a drop in prices because of overbuilding in the condo market, which raises questions about the ability of the market to absorb the new listings or find renters for all of the investment properties.

And all cities are at risk, Alexander says, when interest rates eventually rise from their present "exceedingly" low levels.

Read the full article by