Canada's Housing Bubble

Aug 20, 2010 Adrienne Warren Scotiabank Group

Global real estate markets entered 2010 with a renewed sense of optimism, piggybacking on the broader economic recovery underway. Housing demand and pricing improved in the first quarter of the year in the majority of the advanced nations we track, benefitting from ultra-low interest rates, improved affordability, and in some cases, government purchase incentives.

Australia and Canada, with inflation-adjusted average home prices rising at double-digit rates, led the pack, mirroring their relatively more favourable employment and lending conditions (figure 1). Sweden and Switzerland were posting steady increases, while in the U.K. home prices moved back into positive year-over-year territory for the first time in two years. The U.S. and French property markets were reporting only marginal declines...