Design district.The global housing bubble hit. New Zealand ranks first in terms of price-to-rent ratio and price-to-income ratio, while Canada ranks first in real house prices and household loans as a share of GDP.Please Visit: Design district to Get Your VVIP Registration Today!
The study also believes that there are similar bubbles in the real estate markets in countries such as Australia, the UK, Norway and Sweden.
If house prices rise too much, they are laying the groundwork for a future collapse. After studying 30 years of real estate trends in 32 countries, IMF points out that more than 2/3 of the nearly 50 systemic banking crises over the decades saw house prices soar or plummet. The Oxford Institute of Economics calculates that if the real estate market collapses, GDP will fall by 1.5 per cent and increase by 2.1 per cent.
For the two countries themselves, avoiding a rapid decline or further rise in house prices has become a top priority.
Sales of luxury homes in Toronto and Vancouver, a bellwether of the property market, halved in 2018, with sales of single-family homes with a total price of more than C $1 million plummeting 46 per cent year-on-year in Toronto and 47 per cent in Vancouver.
Sales of the property market are sluggish, but house prices remain high.
Property prices in several major Canadian cities are experiencing explosive growth, according to a report by Better Dwelling, a Canadian real estate website. From 2000 to March 2019, house prices rose 239.9% in Toronto and 315% in Vancouver. Take Toronto as an example, compared with several major cities in the United States, its house price increase is 33.67% higher than Los Angeles, 45.27% higher than San Francisco, 61.01% higher than Seattle, and 133.39% higher than New York.
In 2006, when the Canadian housing market was at its peak, residential investment accounted for 8% of GDP, twice that of the United States. But investment in residential construction in Canada fell 14.7 per cent in the fourth quarter of last year, the biggest drop since 2009. Investment in housing fell by 3.9%, investment in new housing decreased by 5.5%, and investment in decoration decreased by 2.7%. As a result, Canada’s GDP grew by just 1.8 per cent in 2018, down 40 per cent from 2017.
This economic decline also continues into 2019. Canada’s GDP grew by just 0.4% in the first quarter, the lowest since 2015.
Similar to Canada is New Zealand. New Zealand’s GDP grew by just 0.6 per cent in the first quarter of this year.
In 2017, the real estate market contributed more directly to New Zealand’s economy than the country’s manufacturing and agricultural sectors.
New Zealand house prices are soaring while the property market is falling. The number of properties sold to foreigners fell 81% in the first quarter of this year compared with the same period last year, according to New Zealand’s National Bureau of Statistics. In terms of economic growth, New Zealand also performed poorly, growing by just 0.6 per cent in the first quarter of this year.