Another dire prediction about Canada’s housing market was issued Monday by a global credit rating agency.

Fitch Ratings said our country’s home prices are overvalued by 20 per cent, considering the historic drivers of home growth.

The price of a typical detached home in Metro Vancouver hit $976,600 in June, an all-time high, according to the Real Estate Board of Greater Vancouver.

That represents a 6.2 per cent increase from the same month last year. The Fraser Valley also set a record high benchmark price, at $568,600.

The agency warns that the federal government may have to step in and take measures to slow growth – like raising interest rates -- if the market doesn’t start cooling on its own.

“Home prices continue to be supported by historically low interest rates and a lack of supply in the major metropolitan areas; these factors have propped up affordability and drive demand,” the report released Tuesday reads.

Fitch Ratings Director Stefan Hilts told CTV News even though the market is overheated, it’s not predicting a huge price drop anytime soon.

“In practice we really expect home price growth to stop, maybe see a slight decrease in prices, and not even to drop more than five to 10 per cent on a down scenario,” he said.

Fitch blames record-low interest rates for contributing to soaring levels of household debt-to-income levels: The average Canadian owes $1.63 for every dollar earned.

It says that ratio makes Canada’s housing market more susceptible to a crash, saying people would be face major financial hardships if the unemployment or interest rate increases. It says the problem is compounded given the short-term structure of Canadian mortgages.

But Fitch says the Canadian government has taken some proactive steps to mitigate some of the risks to the country’s hosing market, including tightening lending rules through the Canadian Mortgage and Housing Corporation.

“However, the long-term impacts remain unclear, and policy makers may be required to take additional steps over the short term to engineer a soft landing,” it said.

Tuesday’s report echoes recent sentiments from The Organization for Economic Co-operation and Development (OECD), which called on Canada to scale back on government-insured mortgages in order to protect homeowners from a market crash.

A June report from the OECD said that 40 per cent of Canada’s population lives in a city where housing prices are “seriously or severely unaffordable.”