Sept. 24 (Bloomberg) -- The Canadian housing market is headed for a meltdown because households finances are in even worse shape than in the U.S. or the U.K., said David Wolf, chief strategist Merrill Lynch & Co. Canada.

Wolf said in a report published today that Canadian families in 2007 carried an average net debt load that was 6.3 percent of their disposable income, more than in the U.K. and ``not far off'' from the 2005 peak in the U.S.

``We fear that it may simply be a matter of time'' before home prices start plunging, Wolf said. ``We're just now starting to see house prices fall in Canada, and sharp rises in unsold home inventories increasingly imply that this will not be a transitory phenomenon.''

The average resale price for existing homes in Canada's major markets fell to C$316,052 ($305,600) in August, 5.1 percent lower than a year earlier, the Canadian Real Estate Association said on Sept. 15. The Bank of Canada said in July that housing would cut 0.1 percentage point off economic growth this year, after adding 0.2 percentage point last year.

``I do not accept this conclusion, not at all,'' Prime Minister Stephen Harper told reporters in Vancouver today when asked about Wolf's report. ``We will not see the same situation as in the United States,'' he said, citing stronger consumer demand and the absence of subprime mortgages in Canada.

To contact the reporter on this story: Alexandre Deslongchamps in Ottawa at adeslongcham@bloomberg.net.

Last Updated: September 24, 2008 17:26 EDT