Canadian House Prices Rise is Third Highest in the World
The Canadian house price rise is the third highest in the developed world, after Ireland, Sweden, and Australia according to a Scotiabank report.
The report shows Canada’s 8.3% year-over-year rise in the second quarter of 2015, compared to 13.3% in Ireland and 10.1% in Sweden. Canadian real estate exceeds the typically popular markets for foreign buyers in the U.S. (5.4%) and U.K. (5.6%) due to low interest rates and the low Canadian dollar.
Economist Adrienne Warren attributes this to currency exchange considerations, particularly impacting Canadian luxury real estate.
“Foreign exchange considerations are taking on a bigger role, increasing the attractiveness of properties in countries whose currencies have weakened at the expense of relatively stronger currency markets in the U.S. and the U.K.”
Warren believes this is due to a limited supply of single-family homes in Vancouver and Toronto. “People want to live closer to where jobs are and they don’t want to take on long commutes”.
Australia is undergoing the same affordability crisis that Vancouver is having, with the median house price over $1 million Australian dollars. Goldman Sachs estimates Sydney prices as overvalued by 20%, reminiscent of talk about a housing bubble in Vancouver and Toronto.
In Ireland, housing prices were soaring in 2007 when the financial crisis left the nation near bankruptcy, but it seems to have recovered in 2013 and has been growing since.