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Friday, 14 March 2014

Canadian Real Estate Set For Collapse?

Report attempts to quell fears of residential real estate price bubble

Vancouver home prices set record as index shows prices rising for the fourth straight month

OTTAWA — A new report into Canada’s hot housing market is trying to calm fears of a coming collapse in prices, saying the biggest threat to home valuations may be government meddling with mortgage rules.

The paper by economist Will Dunning, who runs a real estate market research firm in Toronto, says Canadians have been mostly prudent investors in housing and that the market can absorb either higher prices or a one-per-cent hike in interest rates.

Rather than being over-valued, house prices in Canada are fairly valued and may even be undervalued, he says.
The paper was released on the same day a new Teranet-National Bank composite price index rose to a new all-time high, showing home prices rose 0.3 per cent in February.
The Bank of Canada and the federal government have warned about an over-heated housing market for several years, arguing that once interest rates start rising, the roof will cave in for some home buyers.

The Organization for Economic Co-operation and Development (OECD) has also pointed to Canada as having the world’s most over-valued housing market.  (Read More)

Comments :

We have had the Canadian Real Estate market on our watch list for some time now, particularly the Toronto Condo market where a bust in this bubble could suppress prices anywhere from 30 to 50% in short order. Once interest rates commence there inevitable climb, this adjustment is an absolute mathematical certainty.

Investors' Insights
March 14, 2014 

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