Canadian real estate prices made one of the largest leaps on news of a pandemic-driven economic shut down. US Federal Reserve Bank of Dallas data shows most G7 countries saw prices rise in real terms during Q2. Canada however, saw real home prices launch at the fastest pace of any of the advanced economies. This comes despite a deterioration in the indicators traditionally attributed to price growth, such as employment and immigration.
Canadian Real Estate Prices See Biggest Jump In Q2
Canadian real estate prices increased at the fastest rate of any G7 country in the second quarter. Canadian real home prices climbed 2.42% in Q2 2020, when compared to the previous quarter. France is a distant second in the Group, with prices rising 1.71% over the same period. Germany is the third fastest, at 1.14% in the quarter – less than half the increase in Canada. Pandemic stimulus helped drive Canadian real estate prices to a new record high. With almost no immigration, and soaring vacancy rates.
G7 Real Estate Prices – Q2 Change
The inflation adjusted change in G7 real estate prices during Q2 2020. Source: US Federal Reserve Bank of Dallas, Better Dwelling.On the bottom half of pandemic gains are the US, Japan, and the UK. The US increased 0.98 in Q2, when compared to the previous quarter. Japan and the UK made declines, with prices falling 0.86% and 0.90% respectively.
Canadian Real Estate Prices See Second Fastest Annual Growth
In terms of real annual gains, Canada is a close second behind France. France saw real home prices rise 5.42% in Q2 2020, when compared to the same quarter a year before. Canada follows with an increase of 5.39%, just 2 bps below France. Germany is in third with a 5.18% increase, compared to last year. It should be noted while all three of these markets are seeing similar price increases, both France and Germany have not seen such large gains persistently over the past few years.
G7 Real Estate Price Index
An inflation adjusted index of G7 real estate prices. Source: US Federal Reserve Bank of Dallas, Better Dwelling.The US, UK, and Japan all had less impressive home price gains over the past year, when adjusted for inflation. The US saw prices increase 3.37% in Q2 2020, when compared to the same quarter last year. The UK follows an increase of 0.36%, a tenth of what the US is seeing. Japan is seeing the worst performance in the G7, down 1.30% from last year.
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Population is accelerating, job market is tight. Population growth slows, and job market is terrible.
Both reasons for prices to rise. It’s almost like Canadians just want it to rise, and look for fundamentals to fill the gap after.
That’s not surprising. What’s surprising is vacancies are rising and rents are falling, and prices are rising.
Los Angeles is seeing prices rise while the population starts declining, and unemployment soars. There’s no real reason for prices to rise, except people have the mindset that prices should rise forever.
We always hear a lot about how if Trump wins, people will move to Canada. What happens if Biden wins, and we see Canadians outflow to cheaper housing, with higher paying jobs, with lower qualifications?
Canada’s population plan actually accounts for that, by importing people. Look at demographic movements on the inter-population charts.
Young people leave cities like Toronto, for other parts. But they’re replaced with inflows of immigration and interprovincial migration, so the government doesn’t really discuss it as an “issue.”
I see the appeal of Vancouver. There’s beautiful mountains, and year round it has the best weather. What’s the appeal of Montreal? Lol
You can’t eat the view.
Vancouver is Canada’s warmest climate..so it attracts retired CDNs across Canada and of course wealthy CDNs.
But it doesn’t attract millionaires (legal one) from foreign countries, as real legal millionaires want luxury homes with beach fronts and exclusive neighbour hoods and exclusive shopping with Mediterranean climates…ex. southern California.
The only millionaires Vancouver attracts are gangsters that love our compromised legal system that affords them a lifestyle that is free to pursue their illegal activities without restrictions
you know too much man
No matter how good the climate is, you could not pay me to live in Vancouver. Ugly city with a nice geography. I’ll take Montreal any day. Bad roads, fierce politics, and all.
The finest strippers 😀
Culture, restaurants, nightlife. 5 hour drive to Boston, 8 hour drive to New York, 2 hour drive to Quebec City. Great nature up north and the eastern townships. Diverse economy. Great quality of life.
I’ve lived in Toronto for two years and couldn’t wait to come back.
We need to investigate how our government (provincial, local and federal) is propping up this real estate bubble.
This is a crime against all Canadians.
It was a mistake to not allow prices fall during 2008, its a worse mistake to do it again this time.
@ kolf EXACTLY! It’s not a mistake at all, it’s so all the people who own real estate can keep their party going and I’m sure the policies are self serving.
Almost all of the offers on houses in Niagara are coming in from people in the GTA. Niagara is Booming. The GTA is bleeding people and not many people are willing to move in from other countries because of the Covid scare. I wonder how politicians will try to attract people back? Negative mortgage rates?
All that matters is interest rates, mortgage bond purchasing, and the green belt. These things control the supply of land and most importantly the supply of money. People will borrow and spend as much as they can if you let them.
Prices are not going up! The average is, but it means nothing.
Sales mix has changed (less smaller condos /condos sold, first time buyers gone). Its the reason your average is up, yet prices are actually falling.