New data from the world’s largest central bank serves a reminder of just how batsh*t crazy Canada’s real estate bubble is. Housing bubble experts from the US Federal Reserve Bank of Dallas (Dallas Fed) released its latest update of global home prices in Q3 2023. Most G7 countries moved in a similar fashion, rising with 2020 rate cuts and have shown recent moderation. However, zooming out reveals Canada’s real estate bubble is nothing like any other G7 country. It puts the peaks seen in US and Japanese bubbles to shame, predating its recent population boom narrative.
Concerns Over A Canadian Real Estate Correction Are Exaggerated
Canadian media may be focused on a home price correction but it’s barely a correction. A typical home saw prices peak in Q1 2022, after rising a whopping 59% from Q1 2020. Since peaking, prices shaved off 16.1% over the following year, before recovering some ground. In the latest quarter, prices remain 11.4% lower than peak. A substantial loss, but not really for anyone zooming out.
Canadian Real Estate Prices Went Bonkers Compared To G7 Peers
The Dallas Fed indexed home prices for G7 countries.
Source: US Federal Reserve Bank of Dallas; Better Dwelling.
Canada’s Real Estate Bubble Makes The US Bubble Look Tiny
The United States had a real estate bubble that shattered the global financial system. Since 2005, US home prices climbed a whopping 88.1% as of the latest quarter. That’s less than half of the 206.8% gain Canada saw, despite being the second largest country in the world, with a GDP equivalent to only Greater New York City.
No G7 Country Has Seen Anything Like Canada’s Real Estate Bubble
Canada’s gap when compared to other G7 countries is even more epic. After the US, home prices showed the most substantial growth since 2005 in the UK (+83.7% since 2005), Germany (+74.8%), and France (+53.7%). More modest gains have been observed in Japan (+5.0%) and Italy (+0.3%). The latter two countries saw their 90s home prices grow almost as fast as Canada today, before never returning to that indexed high.
Canada has managed to see its population rip higher as a result of recent policy decisions. The haphazard decisions appear to exist almost entirely to support its bubble narrative. Zooming out is an easy reminder that concerns about Canada’s state-backed, speculative credit bubble, existed before those decisions.