Credit rating firm Moody’s says that Canada’s economy is in good shape; with a stable banking system and a near-balanced budget; but there is concern over the housing market.

The annual report supports Canada’s AAA rating but warns that the housing market presents a potential risk to the banks; and to the government finances due to the CMHC.

Steven Hess who authored Moody’s report says the housing market is “particularly inflated” and represents the “largest downside risk” in the report. He also believes that with some slowdown in construction already being seen there are “no signs of a soft-landing”.

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