Canada Global

Canadian Real Estate Prices Are The Fastest Falling In The G7, Just 1 Year After Leading

Canadians love real estate so much, they’ve sent price growth higher than almost all of its peers. US Federal Reserve numbers show the market had the highest price growth of any G7 country, as of 2018 Q3. Just last year, prices in Canada were the fastest growing annually in the group. This year, they’re the fastest falling. Here’s some quick insights from the latest numbers.

Canadian Real Estate Prices Are Down Over 4.24%

Canadian real estate prices continued to slip from all-time highs. Prices across the country dropped 1.1% in 2018 Q3, when compared to the previous quarter. That brings prices 0.42% lower than the same quarter last year, and 4.24% lower than peak. During this period, no other country saw declines. However, no other country saw increases to this degree either.

Canadian Real Estate Prices

Inflation adjusted index of Canadian real estate prices.

Source: US Federal Reserve, Better Dwelling.

Canadian Real Estate Prices Grew 4x Faster Than The Median

Canadian real estate prices inflated by a lot more than the rest of the G7. Real home prices in Canada increased a whopping 118.08% from 2005. The increase is more than 4x faster than the median rate of growth across the G7. The second closest G7 country is the UK, which saw prices rise 45% over that same period. Might also be worth noting that at 45%, the UK is being called a  “bubble on a bubble” by global bank analysts.

Canadian Real Estate Prices Vs G7

Inflation adjusted index of G7 real estate prices.

Source: US Federal Reserve, Better Dwelling.

Canadian Real Estate Prices Are Now The Fastest Falling In The G7

Canadian real estate prices also become the fastest falling in the G7, just one year after leading it. The 0.42% 12 month decline in 2018 at Q3 is the only negative real growth in the whole group. The next closest group is Japan, with a 0.3% gain compared to the same month last year. Even with the decline, Canada’s prices are still massively elevated compared to its peers.

Canadian Real Estate Price Change Vs. G7

The 12 month price change of inflation adjusted Canadian real estate prices, versus other G7 countries.

Source: US Federal Reserve, Better Dwelling.

Canadians paid steep prices compared to a few years ago. This is especially true when you compare real price growth to Canada’s economic peers. Prices increased at several folds higher than the typical increase. They’re finally starting to pull back, but have a long way to go before hitting a “normal” pace of growth.

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25 Comments

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  • Teddy 6 months ago

    It’s because Canada doesn’t have as much land as all of those other places. Especially the UK… even though we’re the least densely populated of those countries. 😂

  • Edvard Punch 6 months ago

    Canada also being the smallest GDP, with the fewest people of any of the G7 countries. Good time to realize how government incompetence led to inflated home prices. Home prices being a non-productive investment, that absorbed income that should have went to productive investments and long-term growth of the Canadian economy.

    • Jon Bathmaker 6 months ago

      Weeeeell, I’m not so sure ‘incompetence’ is the correct word. I think that both the Conservative and Liberal regimes have chosen to let prices rise to help their Real Estate industry “friends”.

    • rustinpeace 6 months ago

      100% the long term effects will cause very stagnant growth. Its crazy to see the standard of living of people that bought prior to 2015 with people buying now. So much income being tied up in a house in the second biggest country in the world

  • Oakville Rob 6 months ago

    ‘Just last year, prices in Canada were the fastest growing annually in the group. This year, they’re the fastest falling.’

    That’s saying something given that it’s only January 11 and the first 2 days were statutory holidays 🙂

    BOGO

  • Gregory 6 months ago

    Good thing Real Estate is local ! My Whistler Condo is up 26% according to my last tax assessment.

    • Bluetheimpala 6 months ago

      This is hilarious. Tock. BD4L.

    • Bob Bobson 6 months ago

      Lol! I can totally see recreational properties in whistler continuing to rise as the credit cycle/business cycle turns and recession arrives. Definitely. Only way is up, right? And assessments aren’t lagging, are they?

  • zw 6 months ago

    terrible graph. absolutely terrible.. here are some grade 12 data management lesson I learned

    1) don’t use similar colour for different data point. which shade of blue is UK? which shade of blue is France?

    2. what exactly are we suppose to see in the fluctuation graph? it’s so messy and hard to follow.

    is there anyone proof reading this crap?

    • Jason Chau 6 months ago

      Ah, the real estate bull that last learned about data in grade 12. The emphasizing color is the point, and it looks like that in all financial report charts with more than 4 series. Why?

      The emphasis is to show its bucking trends in the WRONG way. Are all of the people that blame Chinese investors just people like you, that don’t understand how to extrapolate a point?

      Proofread, for your pleasure. 💥

    • Bluetheimpala 6 months ago

      It’s a free resource that provides additional transparency for people like us to: make semi-informed decisions, impress the opposite sex with knowledge of M1+, feel less stupid, understand the implications debt, yada yada yada. You’re a troll, whatever, many come and many go. Tock. BD4L.

  • Steve Joseph 6 months ago

    What happens to this graph if you strip out Vancouver and Toronto?

    • Jason Chau 6 months ago

      It looks pretty much the same. It’s an adjusted, weighted index. Might be slightly lower, but not half of where it should be.

  • Downsizingdiva 6 months ago

    Just want to thank all that make this site possible. It is awesome learning tool. I laughed when I looked at the chart above and was thinking dead cat bounce. I feel bad for anyone that has bought in the last couple of years and upgraded and now sitting on large mortgages. We did the opposite, we sold our house in 2017 (3 car garage on ravine ) when we saw the prices go insane and then bought a house on regular lot for cash.

    • Joe Tyrol 6 months ago

      You need to be careful.

      Take Vancouver as an example. Many people thought that it’s a huge bubble more than 10 years ago. And they sold their house, waiting for the market to crash. But it never crashed, instead, it kept rising even at a faster pace.

      Why? As long as the federal government bring in 10s of thousands of immigrants to Canada, many of them cash rich, and as long as the federal and provincial government keep a blind eye to the out-of-control money laundering in BC, the price of houses will never fall back in line with local income levels.

      • Raging Ranter 6 months ago

        Those who sold ten years ago aren’t the ones who need to be careful. It’s those who bought in the last 3 years you should be worried about.

  • Rick Abrams 6 months ago

    The rise and fall in Canada’s market is exactly what happens with the New Urbanism. By placing artificial restraint on construction of single family homes and forcing construction with land prices are the highest, the government created a limited supply based upon mythology of New Urbanism.

    Why did Canada crash so quickly?

    (1) From my distant place in Los Angeles, the reduction in the market does not seem like a real crash but that at the alt minute the Canadian authorities came to their sense and stopped some of the follishness which flows from the New Urbanism.

    (2) While Canadians live in a narrow band which is a few hundred miles from top to bottom,. the USA in contrast has a band which is thousands of miles. From Toronto to El Paso, it is over 1,600 miles.

    (3) The United States is far, far more corrupt than Canada. Thus Wall Street will gladly drive the entire nation into extreme poverty just to make an extra buck for the 1%

    (4) The current moves by Canadian authorities are preliminary steps, but if Canada is to recover, it needs to jettison the New Urbanism philosophy

    • SUMSKILLZ 6 months ago

      Its not the what but the how. New urbanism is not inherently bad, just like 1950’s Modernism. Its how it played out that is the problem. Capital and debt accumulation was front and centre instead of community design and building infrastructure to support growth. The new urbanism design concept never had a chance to be successful. It was doomed from day one because the actors never had any intention of following the script. Its likely the next big idea will suffer the same fate.

  • Joseph 6 months ago

    Hey realtor Shahid Khawaja,

    Your ad on this page mentioned, “Learn trade secrets from a supper successful realtor.” Come on man, how am I supposed to take you seriously with a typo on an “official” looking invite? So much money (I assume) yet so careless.

    With that said, all of a sudden, I’m hungry…

  • Rana 6 months ago

    Housing
    Crash

  • CanadaSucks 6 months ago

    https://en.wikipedia.org/wiki/Exponential_growth

    Canadian Real Estate price is perfect exponential curve. Curve is starting to point toward the sky in years 2017. You cannot build up price fast enough once you reach the vertical part of an exponential curve. Make sense that prices are going down.

  • Silver 6 months ago

    Bank of Canada, CMHC, Immigration Canada – look no further. Corruption is worse here than elsewhere. We are sheep that serve the federal government’s agenda. They have way too much power. CMHC alone generates like 6% of all federal tax dollars. HST on new homes. They control supply and demand. First time buyers, who are borrowing a boat load, are forced to bail out the aging government. Make no mistake, they care nothing at all for the middle class they left behind in english canada. It is a new paradigm in housing. Corruption has won.

  • dedaus 6 months ago

    The Canadian chart is exponential and shows a classic dead cat bounce. 0.618fib retracement coming soon.

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