Much will depend on the response of housing supply and the extent to which older households downsize. Other factors will also have an influence on housing markets in Canada and elsewhere, many of which could work in the opposite direction. For instance, it will also depend on how much urbanization and immigration bolster demand.
The relative importance of these other factors will differ within and across jurisdictions.15 Nonetheless, there is no guarantee that relying on housing wealth will yield the expected payoff. The second channel through which slower growth and lower returns affect financial stability relates to risk taking.