Canadian Housing: Another Debt-Fueled Bubble?

Posted by Leith van Onselen - Dennis Gartman Comment

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WHO’S IN DEBT THE MOST?:  The US debt problems are obvious and the debate regarding taxes and deficits will be the focus of the upcoming Congressional elections.  However, when we look at which nation is the most indebted it is clearly not the US, even if we compare the plain sum of outstanding debt just to that of other nation’s not even as a percentage of GDP.  Which nation is the world’s most indebted? Actually it is the Eurozone + the UK with just over $7.7 trillion. Next is Japan with $7.5 trillion in outstanding debt. The US has just a bit over $5 trillion and from there it drops materially to Canada with just a bit more than $0.5 trillion; Sweden’s there with less than $0.2 trillion; China’s next with a bit less than Sweden’s and by the time we get down to Norway and Australia it barely registers on the graph. Dennis Gartman For a Trial Subscription go to The Gartman Letter)


Canadian Housing: Another Debt-Fueled Bubble?

There is currently widespread debate in Canada about whether the country is experiencing a speculative housing bubble or asset inflation based upon sound fundamentals. Last week, two opposing think tanks – The Canadian Centre for Policy Alternatives (CCPA) and the C.D. Howe Institute – released papers on the Canadian housing market. The CCPA paper warns that bubble-like conditions have developed in some of Canada’s key housing markets and attempts to model the potential fallout if the bubble bursts under a number of scenarios. By contrast, the C.D. Howe Institute paper argues that a US-style housing bust is highly unlikely due to Canada’s more sensible housing policies and, instead, predicts only a modest decline in Canadian house prices.

So which think tank is right? Is Canada’s housing market and economy at risk of a US-style housing crash, or would Canada’s ‘strong’ banking system, supposedly tight lending standards, and solid economic fundamentals prevent significant house price falls from occurring? Let’s examine the arguments and data.

Uneven house price growth:

….read more HERE