Canadian property bubble

Classic bubble stages chart

The Canadian property bubble refers to a significant rise in Canadian real estate prices from 2002 to present (with short periods of falling prices in 2008, 2017, and 2022). The Dallas Federal Reserve rated Canadian real estate as "exuberant" beginning in 2003.[1] From 2003 to 2018, Canada saw an increase in home and property prices of up to 337% in some cities.[2] In 2016, the OECD warned that Canada's financial stability was at risk due to elevated housing prices, investment and household debt.[3] By 2018, home-owning costs were above 1990 levels when Canada saw its last housing bubble burst.[4] Bloomberg Economics ranked Canada as the second largest housing bubble across the OECD in 2019[5] and 2021.[6] Toronto scored the highest in the world in Swiss bank UBS' real estate bubble index in 2022, with Vancouver also scoring among the 10 riskiest cities in the world.[7]

Royal Bank of Canada analysis showed that by 2022, Canadian housing had become the least affordable that it had ever been.[8] That record was broken a year later, with 63.8% of the median household income required to cover ownership costs of aggregate housing types.[9] Housing is considered affordable at less than 30% of before tax household income.[10][11]

In 2023 Canada’s nonfinancial debt exceeded 300% of GDP[12] and household debt surpassed 100% of GDP,[13] both higher than the levels seen in the United States before the 2008[dubious – discuss] global financial crisis.[14][15] Canada's housing investment as a percentage of GDP ratio peaked at 8.9% in 2022,[16] whereas the US, at the peak of their housing bubble, only reached 7% in 2006.[17][18] Broadbent Institute analysis concluded that Canada's "housing system is unsustainably financializing and concentrating control over basic human rights."[19]

  1. ^ "International House Price Database, Third Quarter 2022 Data". www.dallasfed.org. Retrieved September 3, 2023.
  2. ^ Haber, Bob. "Canadian Real Estate Bubble Blowing Up North." Forbes, Forbes Magazine, April 3, 2018, www.forbes.com/sites/bobhaber/2018/04/02/canadian-real-estate-bubble-blowing-up-north/#1b74d3871d5e.
  3. ^ Economic and Development Review Committee (EDRC) of the OECD (June 2016). "2016 Economic Survey of Canada" (PDF). OECD.org. Retrieved September 25, 2023.
  4. ^ Tencer, Daniel (October 3, 2018). Canada At Risk As 'First Cracks' Appear In Global Housing Bubbles: UBS., HuffPost (Canada edition)
  5. ^ "So Where Is the Next House Price Bubble Brewing?". Bloomberg.com. July 30, 2019. Archived from the original on December 14, 2019. Retrieved June 25, 2021.
  6. ^ "World's Bubbliest Housing Markets Flash 2008 Style Warnings". Bloomberg.com. June 15, 2021. Archived from the original on June 15, 2021. Retrieved June 25, 2021.
  7. ^ "UBS Global Real Estate Bubble Index 2022". Insights. Retrieved September 3, 2023.
  8. ^ Hogue, Robert (March 29, 2023). "Brighter days ahead as home ownership costs go through the roof". RBC Thought Leadership. Retrieved April 28, 2024.
  9. ^ Hogue, Robert (July 4, 2024). "Is the dip in ownership costs a turning point for housing affordability?". RBC Thought Leadership. Retrieved August 21, 2024.
  10. ^ "about-affordable-housing-in-canada". www.cmhc-schl.gc.ca. Retrieved August 21, 2024.
  11. ^ COX, WENDELL (2024). "DEMOGRAPHIA INTERNATIONAL HOUSING AFFORDABILITY" (PDF). Demographia. Retrieved September 2, 2024.
  12. ^ "BIS Statistics Explorer: Table F1.1". stats.bis.org. Retrieved September 3, 2023.
  13. ^ "Household debt, all instruments". www.imf.org. Retrieved April 13, 2024.
  14. ^ "Household debt, loans and debt securities. Percent of GDP". International Monetary Fund. Retrieved September 3, 2023.
  15. ^ "BIS Statistics Explorer: Table F1.1". stats.bis.org. Retrieved September 3, 2023.
  16. ^ "Housing Sector Country Snapshot: CANADA" (PDF). OECD. June 7, 2023. Retrieved April 30, 2024.
  17. ^ Weinstock, Lida R. (January 3, 2023). "Introduction to U.S. Economy: Housing Market" (PDF). Project on Government Secrecy. Federation of American Scientists. Retrieved April 30, 2024.
  18. ^ Punwasi, Stephen (January 3, 2024). "Canadian Economy Dangerously Concentrated In Real Estate, But Gov Wants More". Better Dwelling. Retrieved May 1, 2024.
  19. ^ Journal, Perspectives (April 2, 2024). "Addressing the Rise of Investor Ownership of Housing, Part 1: Assessing the Scale and Impacts across Canada". Perspectives Journal. Retrieved August 21, 2024.