If you’ve paid attention to the Canadian real-estate market over the past year or so, you likely won’t be surprised to learn that the country is home to one of the world’s most booming housing markets in the world.
According to Bloomberg Economics, New Zealand, Canada and Sweden are the world’s “frothiest” housing markets, with the U.K. and the U.S. also in the top list.
“A cocktail of ingredients is sending house prices to unprecedented levels worldwide,” said economist Niraj Shah in Bloomberg’s report. “Record low interest rates, unparalleled fiscal stimulus, lockdown savings ready to be used as deposits, limited housing stock, and expectations of a robust recovery in the global economy are all contributing.”
The research indicates that stay-at-home workers that need more space and government tax incentives are two key driving forces behind the surging housing demand.
On the negative side, the report also delves into a country’s “bubble rank” by looking at factors like price-to-rent and price-to-income. This data indicates that Canada is currently experiencing “bubble warnings” that have not been encountered since the 2008 financial crisis.
That said, the analysis states that given interest rates are still low and lending standards are higher than they have been in the past, a potential trigger for a housing market crash isn’t obviously present — at least not yet.
Shah also mentions in the report that rather than a crash, the currently extremely hot Canadian housing market will likely just cool off at some point in the near future.
Source: Financial Post