Canada’s Housing Market is Similar to Australia’s

The driving forces behind Canada’s high home prices are not quite so unique according to a renowned banker from the Land Under.  This is because most of the reasons bankers and housing experts claim are driving home prices in Vancouver are also similar to some of the factors in Australia’s real estate market.

Philip Lowe, governor of the Reserve Bank of Australia stated both countries have vibrant real estate markets and there is a growing concern over the rate at which home prices are leading people to borrow more, increasing on the national debt rate

Lowe’s speech last week in Australia-Canada Economic Leadership Forum talked about some of the similarities found in between the two countries and it’s quite amazing how the factors work out.

Low interest rates have been shared factors for both countries which has lead to a hike in household debt ratios. High home prices is leading many buyers especially first-time buyers to borrow more to purchase houses.  This month the interest rate at the Reserve Bank is at 1.5%.

An increase in the population of both countries definitely does not come as a surprise as they are both popular destinations for real estate investors.  In the past ten years, the population of Australia year-ends population increase has rose to 1.7% while Canada is at 1.1%. An increase in population is increasing the demand for homes in both countries and interestingly, both are facing short supply of homes presently.

Limited supply of homes is another factor that Australia and Canada have in common.  In a time when demand is high both local residents and foreign buyers, there is a slowdown in the supply end. And for many experts, limited supply is one of the main factors responsible for high home prices are more people are demanding for homes and sellers of the limited available homes are getting involved in bidding wars which are hiking home prices.

But as both countries have shared characteristics for rising home prices, it is hoped that they will come up with effective and efficient measures to cool down home prices.