Canada’s housing is 63 per cent over-valued, says Deutsche Bank
Jamie Henry / Andy Kiersz
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There’s always plenty of debate when economists suggest that Canada’s housing is over-valued by 20 per cent so how do you feel about this one? Deutsche Bank has published an overview of some of the world’s real estate markets and says that Canada’s in over-valued by a massive 63 per cent! That’s more than double the figure that the Bank of Canada estimated in December. The bank’s calculations include comparison between median house price and median household income and house prices in relation to rents. The report also takes into consideration the high levels of household debt and the possibility of price correction.
Deutsche Bank’s chief international economist Torsten Sløk has circulated a chart deck looking at global housing markets, and Canada stands out as having quite a few problems.
According to the report, homes in Canada are 63 per cent overvalued, greater than the 50 per cent levels in Australia and Norway, Deutsche Bank AG said in a report Thursday.
Values in Canada are 35 per cent higher when the median house price is compared to the median household income than the historical average and 91 per cent higher compared with average rentals.
Sløk dedicated seven charts to the country.
Simply put, debt levels are very high, and with sky-high home prices cooling off, we could see pressure on the Canadian financial system and the labour markets.
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