Canada isn’t the only country with stratospheric home prices. But its pace of price growth does lead the way among the G7 nations.
The Canadian unaffordability crisis is sometimes too easily dismissed. Many of those already in the market take for granted the stability that ownership provides, as prices surge all around them.
Sometimes it takes an objective third party to remind us how off-kilter our market really is.
On that note, it’s interesting how the foreign media portray Canada’s housing market. If only our leading politicians seemed as concerned.
Have a look…
“Canadians are so alarmed by the red-hot housing market that many say they’d like to see the central bank raise the cost of borrowing to dampen demand for real estate and stabilize prices.”
[Ed. Note: This story refers to a Nanos poll that found 70% of Canadians were somewhat in favour of the Bank of Canada raising interest rates to slow home price growth]
“The numbers underscore how soaring housing costs have emerged as a major issue in the public consciousness after a year in which prices jumped by 30 per cent or more in some regions…The widening gulf between Canadians with property and those without has some vocal critics casting the issue as a battle among classes or generations.”
— The Australian Financial Review, May 16, 2021 (Source)
“Trying to decide whether Canada’s real estate market has peaked has long been a national pastime. And, last year, even the country’s housing agency gave a steer: it warned that a Covid-led correction was imminent, and prices could fall by as much as 18 per cent. But the market had other ideas. Nationally, average selling prices hit a record high in March 2021, up 31 per cent year-on-year…”
“But while the rise has revived fears of a bubble, history shows that Canada’s housing market can prove resilient…Unlike the U.S. and the UK, Canada did not see a reset in prices even after the 2008 global financial crisis…”
— Financial Times (UK), May 11, 2021 (Source)
Rates are based on a $300,000 mortgage.
“Just like in the U.S., the U.K., Australia and elsewhere, Canada is experiencing a housing craze fed by the Covid-19 pandemic and the demand for more space, rock-bottom interest rates, and demographics, with millennials moving into their prime-buying years. Yet, Canada has seen a more dramatic price run-up than all Group of Seven countries.”
“While in the U.S. there are few concerns about a bubble or a 2008-style crash, that’s not the case in Canada, where some analysts and economists worry about real estate’s outsized role in the country’s economy that could be exposed in the next downturn. Canadian housing as a share of gross domestic product was 9.3% as of the fourth quarter of 2020, up from 7.5% a year earlier and from 6.6% a decade ago. In the U.S., housing is 4.6% of GDP, and the U.S. level at the height of its housing boom reached only 6.7%...”
— The Wall Street Journal, March 24, 2021 (Source)
“Small cities and cottage towns across Canada are grappling with the fallout of surging popularity amid the Covid-19 pandemic, as urbanites flock in, driving up home prices with big-city-style bidding wars and putting pressure on municipal services. The growing demand has led to some small Canadian communities seeing house prices jump more than 75 per cent in one year.”
“The eye-watering gains in Canada are mirroring similar trends in New Zealand, Australia and Britain, where rural home prices are accelerating faster than in cities as avid buyers rush to snatch up cheaper small-town properties and as white-collar workers bet on being able to work from home even after the pandemic ends… But the soaring housing prices are locking locals out of the real estate market, and competition for rentals means many people can no longer afford to live locally, leaving small-business owners scrambling for staff. Even existing homeowners, whose home values have risen sharply, are unable to move up the property ladder as the gap to the next rung widens past their means.”
— The Independent (UK), May 13, 2021 (Source)
If journalists thousands of miles away can see what’s straining prospective homebuyers in this country, maybe it’s time we ask why our policymakers aren’t more urgently pledging resources to correct Canada’s housing supply imbalance. One can only hope that if our domestic media’s spotlight can’t spur them to action, an international spotlight will.