The housing bubble in Canada is huge compared to its G7 counterparts | Urbanized – Daily Hive

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The housing bubble in Canada is astronomically big compared to its G7 counterparts, according to new data.

The US Federal Reserve Bank of Dallas recently published data on global home prices over the past 48 years.

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Better Dwelling compiled housing price index (HPI) data for G7 countries (Canada, US, France, UK, Italy, Japan, and Germany) from 1975 to 2023.

Better Dwelling/US Federal Reserve Bank of Dallas

The HPI measures and tracks changes in residential housing prices over time and shows the movement of home prices within specific geographical areas.

The US Federal Reserve Bank says it uses an HPI for each country that is most consistent with the quarterly US HPI for existing single-family homes.

The bank’s data showed that most G7 countries displayed a similar trend, with prices rising in 2020 and showing some stabilization since then.

The same cannot be said for Canada, however. In the first quarter of 2022, Canada’s HPI saw an increase of 59% to 346.15 from the same period in 2022.

Prices have since dipped, as Q1 results in 2023 came in at 291.05, a 16% decrease since its 2022 Q1 peak.

Quarter 3 prices in 2023 have peaked slightly, up about 5.5% to 306.76.

Even though US home prices have seen a significant increase — jumping 88.1% since Q2 in 2023 — it’s nothing compared to Canada’s dramatic growth.

Our housing market has been a concern for analysts for a while, as the country’s housing stock lags behind its booming population, and longtime low-interest rates have seen steep increases over the past two years.

In August, Phillip Colmar, the managing partner of New York City-based independent global research firm the Macro Research Board (MRB), told BNN Bloomberg TV that he believed Canada was “sitting on probably one of the largest housing bubbles of all time.”

Colmar said Canada was a weak link to the global economy due to its historically low interest rates over the past 10 years.

The “worst part for the housing bubble is when you have a credit bubble underneath it, and the amount of Canadian leverage into the system versus income is pretty astronomical.”

In May 2023, the Canada Housing Mortgage noted that Canada had the highest household debt levels in the G7.

Mortgages had a big role to play, making up around three-quarters of household debt in the country.

With files from Isabelle Docto and Kenneth Chan

This post was originally published on 3rd party site mentioned on the title of this site

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