Canada Global

BIS: Real Estate Prices Have Only Recovered In Half of G20 Countries Since 2007

Canadian real estate prices skipped the Great Recession, but most places weren’t so lucky. Analysts from the Bank of International Settlements (BIS), the central bank for central banks, crunched the numbers for G20 real estate prices. The majority of advanced economies saw home prices rise in 2017. Despite the increase, home prices in half of these economies are still below 2007 levels in real terms.

Canadian Real Estate Prices Increased The Fastest In The G20

Canadian real estate prices outperformed the rest of the G20 in 2017, according to the BIS. Canada saw prices increase by a massive 7.49% in real terms. In a distant second was Germany, with an increase of 4.81%. The US came in third, with an increase of 3.93%. Real estate prices in Canada increased over 30% faster than the next closest economy.

Only five G20 countries saw prices drop in 2017, with Russia, Brazil and Italy hit with the biggest losses. Russia saw prices fall 5.46% in real terms over 2017. Brazil did slightly better with home prices dropping 4.42%. All three of these economies had a bit of political turmoil last year, so it’s not unexpected.

Residential Real Estate Price Growth In G20 Countries (2017)

The percent change of residential real estate prices in countries across the G20 in 2017.

Source: Bank of International Settlements. Better Dwelling.

Canadian Real Estate Prices 3rd Fastest Rising Since 2007

BIS researchers also made a special note on performance since the Great Recession. Canadian real estate prices are up 44.8% since 2007, the third highest in the G20. Only India and Brazil ranked higher, rising 94.9% and 46.29% respectively. For context, US real estate was still down 3.31% from its peak in 2007, at the end of 2017. Canada is the only country in the group to see household debt to GDP rise above 100% since then.

The biggest losers for home prices since 2007 were Russia, Italy, and South Africa. Russia had the biggest drop with prices falling 49.81% since 2007. Prices in Italy and South Africa fell 25.92% and 18.53% respectively, since the Great Recession.

Residential Real Estate Price Growth In G20 Countries Since 2007

The percent change of residential real estate prices from 2007 to 2017, in G20 countries with comprehensive housing data available.

Source: Bank of International Settlements. Better Dwelling.

The word recession is often treated as a bad word, but they’re actually a routine procedure. They purge economic inefficiencies, to prevent them from getting out of control. The Great Recession was a purge of one of the worst economic inefficiencies since the Great Depression, in the 1930s. Two notable countries that saw real estate prices avoid any significant correction were Canada and Australia. Both countries now have their largest economic capitals topping the UBS list of real estate bubbles. How strange.

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27 Comments

  • Reply
    Bluetheimpala 3 weeks ago

    Something to think about when looking at the recovery chart; out of the top 5 countries 3 are emerging markets where you’d expect prices to be rapidly increasing as the population increases wealth and moves to home ownership. The fact we’re outpacing China and just slightly below Brazil is fucking scary when you think about it. To make this make sense we all have to agree that 3 emerging economies, which have been going bangbusters over the past decade in terms of GDP, with populations totaling 2.5+ billion have similar demand for housing resulting in similar % increases (ok, India is blowing the rest out of the water I know but this is my argument god damn it!)…remember people this is % not $. A shack in India that was $10 and is now $1000 is a bigger % increase than $400K to $800K….so as long as we all agree that the above makes sense then Canadian housing makes sense. Where are my RE boys at? Let’s go buy some condos bitches! BD4L.

    • Reply
      Ian 3 weeks ago

      Yup. It’s in “real” terms, so Chinese debt deflation is occurring. Prices are pretty steep in parts of China, and the debt-to-income ratio is very high, but at this pace it halves itself every 11 years once adjusted.

      To contrast, Canada is targeted at 2%. Without a major correction, mortgage growth would have to stall for 35 years.

  • Reply
    Trader Jim 3 weeks ago

    Hey, look at that! Canadian real estate prices outpaced China.

    Wait a second, Canadian real estate prices outpaced China.

    China, one of the fastest growing countries in the world.

    Outpaced by Canada.

    China, the country with a massive housing bubble that’s spilling into other countries.

    Outpaced by Canada.

    Let that sink in. Then let me know what currency you plan on moving your Canadian dollars into.

    • Reply
      Bluetheimpala 3 weeks ago

      Let me give you a long yup on that one Jim…yuuuuuuuuuuuuuuuuuuuppppp
      Honestly I’m a couple more markers away from dumping some money into gold. I don’t know what would be safe in the next 6-18 months. Maybe government debt, that 2yr tbill is looking tasty….or just put more in the MJ, lol…I’m a millenial after all!

      • Reply
        Grizzly Gus 3 weeks ago

        I’ve been buying some gold and silver. Close to 5% (mostly gold) now. May go to 10%. Sometimes get paid in USD so hording that for the time being as well.

        Think stock markets will go first. Plan on buying into a few companies after the crash. If we get a huge yield spike before the economy tanks, I might buy some long dated bonds.

        • Reply
          Bluetheimpala 3 weeks ago

          I hope I don’t have to pay you for that investing advise Grizz! many thanks

          • Grizzly Gus 3 weeks ago

            None, but if you lose everything following my advice………. I say my bad in advance

    • Reply
      Jimmy 3 weeks ago

      It shows that Chinese RE bubble (and India’s RE boom) has been spilling into Canada. Conservative Government of Canada along with BC and Ontario Liberals let this happen while most other countries saw the problems coming and was proactive in preventing RE bubble build ignited be foreign bubble money.
      Any RE that grows beyond a country’s economic fundamental is bubble. People ignore such a fundamental fact.

    • Reply
      Jay 3 weeks ago

      USD. Moved it back when CAD broke 0.80

      ….

      The Fed Reserve has another interest rate meeting next week. With all the job news this week, I would be surprised if they don’t raise rates down south.

  • Reply
    Bluetheimpala 3 weeks ago

    Lol…I had to share this…dailybeast article that feels like mid-2017 in Canada; I’ve been reading about a housing bubble in the US for a few months now…https://www.thedailybeast.com/us-house-prices-rising-twice-as-fast-as-pay-says-poll?ref=home
    BD4L.

  • Reply
    6ix 3 weeks ago

    Australia,Canada,Newzealnd all 3 have the lowest population density in the world. But experienced highest realestate spikes .
    In all 3 places boomers wealth increased at the cost of yonger generation . Banks, government,media all cheer leaded the wealth transfer . By 2030 interest rate may go back to 8%, else pension funds can not survive.. god bless 3 countries

    • Reply
      Bluetheimpala 3 weeks ago

      Canada lacks financial oversight. Australia and New Zealand didn’t even see it coming but somewhat swiftly identified the issue and put and end to it but they didn’t let prices get out of control like we did. Rates will not be 8% by 2030 as that suggests we’ll go 10+ years without a recession requiring liquidity. If we even hit 4% at the Fed (BoC follows) for more than 4 quarters I’ll be surprised; chairman is looking for 3% as a normalized rate but lets be honest that’s ambitious/naive seeing what is going on. I suspect they’re going to keep ratching it up to the mid-3, recession in late-2019 (we caused it but more so cheap money in the west) and then they let it play out and maybe actually increase rates to clean out the rubbish. At least well have 200 bps to play with to help kickstart the economy….it would be ideal if we keep increasing to the mid 4s minimum but I don’t believe that is even possible.

      • Reply
        6ix 3 weeks ago

        Currently we are getting cheap money in the name of low inflation. But in reality inflation is there every where , all central bankers are blind to the inflation. ( aka We tampered inflation index). Once the amozon effect and cheap Chinese products comes on the rearview mirror inflation will become a problem again. Else there will be massive currency devaluation. We ship our wealth to Asia over night

  • Reply
    Grizzly Gus 3 weeks ago

    More relevant to the post from the other day but I love this quote.

    “Mum & dad are lending money to their kids so their kids can afford to pay the prices demanded by mum & dad & their friends,” explained buyers agent Henry Pryor. “It’s like a giant Ponzi scheme but where the victims are your children.”

    This is about UK HELOCS and 100% mortgages.

    https://wolfstreet.com/2018/05/31/bank-of-mum-dad-huge-prop-under-uk-housing-bubble-is-running-out-of-liquidity/

    • Reply
      Bluetheimpala 3 weeks ago

      OMG. Thank you for sharing, I’ve had my head in the sand for the last few days. I need to start reading up on the rest of the G20 but I know italy is a mess as is spain. We’ve read there are bubbles and BD showed all of the markets are aligning but to read that the UK economy is tanking is worrying; Brexit is a bitch but I thought they were weathering through it more or less. I’ve also heard the US is in trouble with 6-18 months looking really bad. This dangerous credit cycle is going to torpedo everything for 15+ years, maybe 20+ but everyone seems to thinks these problems playout in a couple years and then ‘to infinity and beyond’…I find this the most sad…let’s see next year how many stubborn boomers who ‘know’ their property is worth ‘$XYZ’ end up selling in desperation as the new ‘fucked reality’ sets in: from home values to cashflow to retirement all of these are going to be completely fucked until they die and probably beyond that. Makes me sick as it will impact my parents and those around me.

      • Reply
        @xelan_gta 3 weeks ago

        So who will go bust first: Canada, UK, Australia, Italy or China? Make your bets:)
        I heard prices in Tokyo are also declining and Japan has highest total debt in the world so we can add it to this list as well along with US which has a lot of talks about upcoming recession.

        Blue, you parents can still sell now while prices are high;) It’s a musical chairs game, it doesn’t matter if you are a boomer or millennial as long as you exit before it’s too late you are OK.

        • Reply
          SCE 3 weeks ago

          Where would Blue’s parents move to afterwards? They are still going to need housing of some sort. I mean they can just pick up and move to Halifax where housing is cheaper but will they? They can rent and ride it out hoping for a collapse in housing to buy back at lower prices, but that will support the rental market and add to the positives of buying a house.

          Again, I’m not saying that Toronto real estate is the best buy right now. It could go down, but it could also go up. Historical tendencies can’t be relied upon 100%. The world has gone through massive structural changes, globalization being a major change. There are plenty of markets where housing is sky rocketing. Hong Kong is an extreme example. No end in sight for housing prices there. So if we are going to have a conversation on global housing prices converging why not bring Hong Kong into the picture? How about other countries where cost per square feet are multiples times more than Canada.

      • Reply
        SCE 3 weeks ago

        LOL

        Reading Blue’s constant rants about how the world is imploding while the exact opposite is happening is pure comedy!

        This site has become a joke, constant rants about how the housing market will crash, people can’t afford, etc. While I agree, household debt is high, that doesn’t necessarily mean housing will crash. Vacancy rates are almost zero and rents keep increasing. Doesn’t really support the narrative that housing will crash. Sure, interest rates are increasing, but if it ever gets to the level where it’s detrimental to the economy, do you really think the BOC will keep raising rates? Any signs of cracks, the BOC will pause and actually CUT!

        Toronto housing may not be the best investment, but it’s far from the absolute worst investment that this site and habitual posters claim it to be. Will prices go down more? Sure, it has come off quite a bit from last year. However, it has also stabilized and increased since December.

        • Reply
          carlton 3 weeks ago

          My parents bought there home for half price in 1991 (facts), Sounds like housing will never crash in your mind, that has never happened before in Canada right? Wake up!
          Those who bought (overpaid) in the last couple years constantly spew this narrative. Interest rates are going up, inventory is rising and prices are falling, thats a fact not an opinion. Sales have only gone one direction since last year and its not up. You don’t have to be a genius to figure out the average consumer is tapped out and we are headed down.
          Good luck renewing that mortgage!

  • Reply
    W 3 weeks ago

    My question is how will the recent tarrifs affect Mr. Poloz’s decision? Will he be like ‘Political uncertainty’ etc etc and not hike the rates in the short term?

  • Reply
    gear74 3 weeks ago

    Hey Blue Bear. Tell me when the crash is coming, at least for the Downtown Toronto condo market, so I will remind you about that. Meanwhile chew on that : https://torontolife.com/real-estate/state-condo-market/

    • Reply
      carlton 3 weeks ago

      1. Who is Toronto life? surely you have a better source……
      2. Do you think articles from Toronto life would be biased? of course not!

      Show Blue who is boss ! Buy a couple Condos and be sure to report back in 2 years and and show these losers just how right you were!

      • Reply
        gear74 3 weeks ago

        Carlton you spot on! I did purchased 2 condos in Downtown Toronto in 2015! Both of my condos are up 250000 dollars each already and counting up! And about the article – tell me one thing that people in this article said something wrong or biased?

    • Reply
      RM 3 weeks ago

      Ah, Toronto Life… chock full of facts from a developer, a banker and a real estate agent.

      • Reply
        SCE 2 weeks ago

        And who are you? Who’s Blue, Gus, Carlton???

        Experts I’m sure! lol

        • Reply
          RM 2 weeks ago

          Look, you can follow whatever advice you want but I generally feel it’s good practice to recognize who is incentivized by the information being presented. Who stands to benefit from the information? I’m a homeowner, so I actually benefit from being bullish, but it doesn’t mean that’s what I believe. I just don’t want to be blinded by what I want versus how things actually are. Again, it’s your money so go long all you want, but I trust data not opinions, not even my own.

          • SCE 2 weeks ago

            I agree with you, but there are habitual posters here that go on and on about a pending doomsday. It’s possible, but for the time being it doesn’t show it. Time will tell.

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