Economists and experts are predicting home prices in Canada could drop this year, with a likely 15 per cent price correction hitting both Vancouver and Toronto in the next few years.

In a report issued by the Toronto-Dominion Bank (TD) on Monday, economists Derek Burleton and Leslie Preston pointed to sluggish economic growth and a less accommodating interest-rate environment as two big drivers behind a potential correction.

Vancouver’s housing market has already seen cooling this year as sales and prices have moderated recently, though Toronto’s housing market continues to register strong growth. Despite that divergence, TD said both cities will likely see housing prices correct in tandem with each other in the coming years.

Despite predictions of a correction, the TD economists do not see evidence of a bubble at the moment.

In its quarterly economic update, the Royal Bank of Canada echoed that sentiment, saying that current inventory levels show the housing market in Canada is “balanced.”

RBC notes that recent data already show that growth in housing prices is moderating, and it expects that trend to continue.

“Overall, the prospect of the Bank of Canada beginning to increase interest rates in the fourth quarter of 2012 will likely result in housing demand slowing further, thereby resulting in a flattening in home prices at the national level,” RBC said in its outlook.

But given the crisis in Europe and the potential for a slowdown in the United States, there are risks that housing prices could see a correction beyond the 15 per cent TD economists expect.