WASHINGTON, April 4 — The risks of a sudden drop in Canadian house prices have risen over the last two years to levels not seen since the financial crisis, the International Monetary Fund said today.
The conclusions appeared in a report released ahead of next week’s IMF-World Bank spring meetings.
A bubble in US home prices burst in 2007, causing the roiling market for complex securities backed by residential mortgages to implode – sparking the global financial crisis and Great Recession a year later.
Last year, US homes were appeared less overpriced than they had prior to the crash in 2008, the report said.
“In contrast, the housing market in Canada headed in the opposite direction, especially in cities such as Hamilton, Toronto and Vancouver, where valuations look overstated, much as in 2008,” the report said.
Transactions involving foreign banks appear to make real estate prices riskier in North American cities such as Toronto, Vancouver, British Columbia and Calgary, Alberta as well as Las Vegas, Miami and Los Angeles, it said.
“In Canada, the effects are most pronounced for the major cities in Alberta, a province sensitive to oil fluctuations and where real house prices almost tripled over the past four decades but have recently seen a correction,” according to the report.
Elsewhere, recent data show increased risks on a three-year horizon in real estate markets for other countries, including China.
“This may be a cause for concern for financial stability and for the global macroeconomic outlook over the medium term,” the report said. — AFP
Source: The Malay Mail Online