Canada

Global Real Estate Prices Grew At The Fastest Rate Ever. Canada Grew 3x That Rate

Global real estate prices are growing at the fastest rate ever, but it’s nothing like in Canada. US Federal Reserve data shows annual home price growth for advanced economies hit a record in the first quarter of 2021. So did Canada. The difference is Canada’s record growth is more than 3x as large as other advanced economies. It would be less of a problem if Canadian home prices hadn’t grown over 7x the rate since the Great Recession.

Canadian Home Prices Made The Largest Annual Jump Ever

Canadian home prices increased at a rate that should have set alarm bells off. Real, a.k.a. inflation-adjusted, home prices increased 8.8% in the first quarter of 2021. Compared to a year before, prices are 20.2% higher, and have increased 123.8% since 2005. The annual growth is the largest rate ever seen in Canada, with data going back to the 70s. 

Global Residential Real Estate Prices

An inflation adjusted index of Canadian and Global home prices. The global index only includes advanced economies.

Source: US Federal Reserve; Better Dwelling.

Global Home Prices Made The Largest Annual Jump Ever As Well

Global home prices, which only include developed economies, also grew at a record rate. Real home prices increased 1.57% in the first quarter of 2021. Compared to a year before prices are now 5.85% higher, and have increased 16.49% since 2005. Much like Canada, the past year has seen the largest annual growth for home prices ever. But, as you may have noticed — Canada is growing at a much faster rate. 

The Record Canadian Home Price Growth Is 3.5x Larger Than The Global Record

Global home prices might be growing at a record rate, but it’s just a fraction of Canadian growth. In the first quarter, Canadian home prices grew 5.6x faster than the global index. Over the past year, Canada managed to squeeze out a rate of growth over 3.5x higher than the global index.

Canadian vs Global Residential Real Estate Prices

The annual rate of growth for residential real estate prices in Canada, and the Federal Reserve’s Global index.

Source: US Federal Reserve; Better Dwelling.

A year or two might just be a short-term blip indicating strong demand. That doesn’t appear to be the case though, with it being a much longer-term trend. Since 2005, Canadian home prices have increased at a rate of 7.5x that of global home prices. 

Don’t mistake it as Canada tends to just be a global outperformer. Over 40% of that growth occurred since 2015, indicating the froth accelerated recently. Combine that with the country’s GDP per capita never retaking the 2012 high, and this isn’t because the economy is doing extraordinarily well. It’s due to the overreliance on real estate debt over the past few years. Debt’s never a problem, until it is.

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3 Comments

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  • Bob Walter 1 week ago

    Makes sense, there’s no land in Canada and we have to import all the wood plus we added millions of people to the population last year.

    • Deanna 1 week ago

      Exactly! And we are an island in the middle of no where!

      • Doomcouver 3 days ago

        I thought i was living in Canada, the 2nd biggest land mass in the world. I didn’t realize I lived in Japan instead. What a revelation. haha

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