“Solving the UK Housing Crisis , the Bow Group”, so what about Canada?

“Denmark prohibits non-EU nationals from buying a home unless they have lived in the country for five years”

This is a worthwhile read.  A report on the UK housing market’s affordability crisis by a UK Right Wing think tank that recommends limiting foreign ownership of the property market.  I can definitely see some relevance to Canadian property markets here and the issues raised are very much in line with those expected by the considerable excess asset focussed money supply growth we see globally.   Unconventional monetary policy and increasing income inequality running alongside slowing economic growth have increased the asset focus of global money supply, especially towards hard real assets such as property that will not disappear in an economic/financial crisis.  

You can see this in the Canadian asset market:

The real return on the S&P/TSX composite since the market peak in September 2007 has been –23% to mid December 2015:

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Yet the value of the Canadian residential property and land has moved the other way:

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Interestingly the MLS Canadian Composite Home Price Index shows an increase of 33% since since September 2007 and the Greater Toronto component an increase of 59.2%.  

And there has been an increasing dialogue on the issue in the Canadian press:

Affordable housing crisis affects one in five renters in Canada: study” “One in five Canadian renters face an affordable housing crisis, spending more than half their income on shelter costs, a problem that appears to be even more acute in suburbs and small cities than in major urban centres.”

Moody’s, The Economist warn of high Canadian debt, housing prices” “”The risks are less around the rapid house price appreciation per se, than the fact that, relative to incomes, homes in Toronto and Vancouver are increasingly becoming unaffordable either to own or to rent,”

Thoughts on the Toronto Condo market: crash or soft landing..?

Just reading a Globe and Mail article on the Toronto condo property boom:

resale statistics suggest that most of those investor-purchasers are holding their units for long-term gains rather than flipping them for quick profits…..“Tal, like many economists, believes that Canada will come in for a soft landing, not a crash. But Toronto’s condo industry still feels uncertain.”

The first comment, of course, is a throw away line and means nothing.  The second is arguably incorrect and ignores some key dynamics that could well lay the ground work for a crash.

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Beneath the surface of Ontario’s economy: what support for the housing market?

There has been a rising chorus of commentary on the Canadian housing market bubble of late and a number of recent articles (1, 2, 3) have infused the debate with comments from Robert Shiller of Yale. Shiller is one of the very few academic economists who does not appear to be caught by the Ivory Tower syndrome of efficient markets and rationale individuals.

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Concerns about flipping may be overblown!

Well, I do not know more than the anecdote, but a couple of weeks ago, as we stopped off at a Starbucks on the way up north, I overheard a barista saying he was offered 5k a month to help flip properties.   No disrespect, but there might be something going on!

While investors represent a large share of condo buyers, concerns about property “flipping” might be overblown, the report adds.

Canada?

Quarterly retail sales growth weak, but not unlike 2011:

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But residential construction as a % of GDP growth, 5 year rolling, presents some interesting visuals:

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As of Q1 2012, residential construction represented some 48% of nominal GDP growth, and including non residential structures, some 66%.

I do not know about “you”, but driving round Toronto is all about spot the crane!  Really, have you ever seen so many cranes?