Like the Energizer bunny, Canada’s housing market keeps on going, defying long-standing predictions of a slowdown.

Canada Mortgage and Housing Corp., the country’s national housing agency, has again raised forecasts for starts and prices.

And Canada’s central bank is fretting anew about financial stability risks from elevated household debt and lofty home prices.

It’s one of the side-effects of keeping interest rates low, as Bank of Canada Governor Stephen Poloz acknowledged in front of a parliamentary committee late Wednesday.

Canada’s housing market didn’t experience a U.S.-style bust, thanks in part to more conservative lending practices. The government has tightened mortgage insurance rules four times between 2008 and 2012 to cool the market and rein in household debt that Canadians have built up by using cheap borrowing costs to buy homes.

The last round of tightening appeared to be having an impact, as debt levels dropped from record levels and housing slowed. But they have picked up again in recent months.

The International Monetary Fund lists Canada among the countries where home prices are over-valued.

The Organization for Economic Cooperation and Development said almost 40% of the Canadian population now lives in a city where house prices are “seriously or severelyunaffordable.”

Some observers are worried there is a housing bubble waiting to burst. But such “doom and gloom” scenarios are probably overblown, according to Douglas Porter, chief economist at BMO Capital Markets.

To be sure, there are serious risks, he says. If the Bank of Canada surprises with big rate hikes or the global economy stumbles badly, it could hit the housing market hard. But he, like the central bank, sees a soft landing.

Under most scenarios, “I would assume the Canadian housing market would keep plowing ahead,” Mr. Porter said.