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During the past 12 months there has been a great deal of discussion regarding the potential overheating of the Canadian housing market.
Although many hope for this not to be true, Canada’s national housing agency has stated that it will underwrite less mortgage insurance this year based on the simple fear that the market may be ready to burst. Canada Mortgage and Housing Corp., (CMHC) says the amount of insurance in force will decline to $545 billion this year, down from $566 billion in 2012.
Economist Robert Kavcic has stated that Canada’s long-running housing boom has been held up by a large number of “echo boomers” – people who are around 25-34 and prefer an urban lifestyle; a trend that will be difficult to sustain.
Last week, The Globe and Mail reported that Albertans are experiencing great household debt as house prices continue to rise. The paper quoted BMO economist, Sal Guatieri saying, “Policy-makers have been worried about Canadian household debt for some time and it appears that for most households they are getting the message and slowing their rate of borrowing, but in Alberta that doesn’t appear to be the case.”
Guatieri says: “It looks like mortgage debt, in particular, is rising quite rapidly.”
The Bank of Montreal predicts that thanks to shifting population patterns, Canada’s market is likely to slump by 2018, a statement backed by an IMF report that identified Canada as one of a growing number of countries where housing prices are becoming excessive.
Unfortunately, according to the report, Canada is beaten by only one other country – Belgium.
Although the IMF did not use the words “housing bubble”, it says “the world must act to contain the risk of another devastating housing crash.”
So for those living in Canada, it may come as some assurance that they are not the only ones facing a tight future, especially as top GDP countries may also share the same fate.
According to the report, a total of 33 countries out of 52 in the Global House Price Index have showed increasing house prices, even when the economies of some countries have slowed down.
For example, the U.S. housing market rose by five per cent per year up to 2013, though the economy has only grown by half as much. Brazil is facing the same grim reality, though its economy has grown even less than the U.S.
Property Rescue has published an infographic (below), discussing the housing markets of several countries. It provides an insight into the trends in the global property market and presents a platform to compare and contrast differing country housing data to Canada’s.
This story was written by Property Rescue, a firm based in London, England that purchases properties directly from homeowners. It says, “Over the years we’ve helped thousands of people sell their homes and rescued them from heart-breaking situations.”
