Canadian Housing Bubble Hasn't Bursted-Yet
I recently linked to an article suggesting that the Canadian housing bubble might be ending.
Now however, I see several reports suggesting that the article was probably misleading, or at least premature. First of all, a house price index made using a similar methodology as the U.S. Case & Schiller index reports that house prices in fact continues to increase, rising by 1.5% in June 2010 compared to May 2010 and by 13.6% compared to June 2009. The annual increase matches the record set in the previous month
Secondly, other indicators, including a rising trade deficit (despite rising commodity prices) and a declining household savings rate, suggests that the Canadian economy is still in a bubble phase.
The deceleration in Canadian money supply growth in recent months and is likely to continue to see given the latest interest rate hike, however makes it likely that we will see a slowdown in the housing sector later this year.
Now however, I see several reports suggesting that the article was probably misleading, or at least premature. First of all, a house price index made using a similar methodology as the U.S. Case & Schiller index reports that house prices in fact continues to increase, rising by 1.5% in June 2010 compared to May 2010 and by 13.6% compared to June 2009. The annual increase matches the record set in the previous month
Secondly, other indicators, including a rising trade deficit (despite rising commodity prices) and a declining household savings rate, suggests that the Canadian economy is still in a bubble phase.
The deceleration in Canadian money supply growth in recent months and is likely to continue to see given the latest interest rate hike, however makes it likely that we will see a slowdown in the housing sector later this year.
posted by stefankarlsson at 6:00 PM
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