Canada’s Housing Price Debate – International Economists vs. Canadian Economists
On November 19, 2013, the Organization for Economic Co-operation and Development (OECD) came out and issued a warning regarding potential trouble in Canada’s housing market. They rated Canada’s housing market threat as the third highest in the world.
The OECD report states, “Residential investment is likely to weaken since the housing stock seems greater than underlying demand.” More specifically, the OECD predicts that Canada is in a bubble, along with Norway and Australia. If there is any letdown in demand, there could be catastrophic consequences.
On December 11th, the Deutsche Bank came out and released a report stating that Canada had the most overvalued housing market in the world; 60% overvalued to be exact. Business Insider, released this diagram interpreting the results of the Deutsche Bank’s report.
However, both the Bank of Canada and many notable Canadian economists have stated repeatedly that they see no housing bubble (Globe and Mail, 2013).
This now comes down to a wait-and-see game to see who is right.