In its report Deutsche Bank says that Canada has the most overvalued housing market among 20 developed countries. It is to be noted that Japan ranked as the most undervalued housing market in the bank’s survey where it was 39 percent below historical norms. The new report is being released when predictions are being made that real estate will be in good health the next year.
The report says that the forecast for 2014 shows the upward trend continuing. Here investors are expecting that with values expected to again climb in 92 percent of markets surveyed, the property prices may increase further. Major expensive areas are Hamilton-Burlington, Barrie, Ont. and District, Calgary and St. John’s, NL, Greater Vancouver, Winnipeg and the Greater Toronto Area, etc.
Factors for Increasing Property Prices
According to the report although there are several factors/reasons that are contributing to the increased real estate prices, the most probable reasons are build out. In its estimate Deutsche Bank estimates that house prices in Canada are overvalued by 60 per ent and that is a leading cause that new investors or buyers are unable to own their own houses.
The report says that the average of two different measures i.e. home prices compared to rent (88 percent overvalued) and home prices compared to income (32 percent overvalued) have gone up. In its analysis it compares house prices to historical norms.
The increasing House Prices Compounding the Issue
Thousands of Canadians are unable to own home despite the fact that it has limitless land and houses; however, prices higher than Tokyo and Hong Kong which are short of land. The critics are of the opinion that this is depressing to see the house prices increasing monstrously and not in accordance to the land available.
Some observers believe that it is due to migration from various parts of the world to Canada that is causing the trouble to real estate market as demand for housing increases.
Many of the current generation believe that may be the next or next to next generation won’t be able to own its own home the way the real estate market is going up. Though, they may be wrong in their assumption, the overvalue real estate market needs to address the issue as early as possible.
To contact the reporter of this story: Jonathan Millet at email@example.com