(Bloomberg) -- Prem Watsa, head of Canadian investment firm Fairfax Financial Holdings Inc., said the Toronto property market is in a bubble that will end with pain for banks that financed the growth.
"Most banks can't survive a 50 percent drop in real estate values," Watsa said Thursday during Fairfax's annual general meeting in Toronto. "It's going to come down, and a lot of people are going to get hurt."
The Ontario government on Thursday announced a series of measures, including a tax on foreign buyers and expanded rent control, aimed at curbing the city's soaring real estate prices. Home prices in the Toronto region rose 6.2 percent in March, the biggest one-month gain on record, according to a benchmark price index by the Canadian Real Estate Association, and jumped almost 30 percent in the past 12 months.
Watsa helped Fairfax prosper in the credit crisis by betting on the decline of over-leveraged financial companies. He has warned as far back as the 2012 annual meeting that Canada's housing prices could be too high.
--With assistance from Kim Chipman
To contact the reporter on this story: Scott Deveau in Toronto at sdeveau2@bloomberg.net.
To contact the editors responsible for this story: Elizabeth Fournier at efournier5@bloomberg.net, Dan Kraut, Steven Crabill
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