Fitch, the ratings agency, has reversed itself on Canada. It now believes that the housing market there is poised for only modest declines at worst. Previously, Fitch had said that Canada’s housing market was well overpriced and that a major correction was a serious risk. I believe the combination of high prices and high household debt means the risk of a major correction is still there.
Every survey of global house prices one consults, shows Canada’s residential property market to be significantly overvalued. And this dates back some time now. Let me chronicle how the housing market run-up in Canada has been covered in the media.
When the Economist surveyed house price gains in 2005 during the global housing bubble. Canada was only middling in terms of gains. In the...
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Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.