Canada’s deflating housing bubble stymies wealth effect of booming stock market
Canada's housing market is experiencing a significant slump, impacting household spending despite a booming stock market. Home prices have declined by 20% since February 2022, making Canada the only G7 country to see a nominal decline in home prices last year. Analysts warn that the negative wealth effect from falling housing prices could hinder economic recovery efforts.
- ▪Canada's housing market slump is the longest in recent decades.
- ▪Home prices have fallen by 20% since February 2022, affecting household spending.
- ▪The Canadian Real Estate Association has downgraded its housing market forecast for 2026 and 2027.
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ShareSave for laterPlease log in to bookmark this story.Log InCreate Free AccountCanada’s housing market slump, the longest in recent decades, is straining household spending even as a record high domestic stock market generates hundreds of billions of dollars of increased wealth.Canada was the only Group of Seven advanced economy to post a home price decline last year in nominal terms, the latest Bank for International Settlements data and Reuters calculations show, as many households renewed mortgages at borrowing rates well above pandemic-era lows and as slower growth in immigration reduced demand for housing.Less consumption due in part to lower housing prices could hinder Prime Minister Mark Carney’s efforts to revive Canada’s economy, which is also contending with a trade war…
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