Leftbank condos location. Why can’t house prices plummet? Excessive debt and unrealistic house prices are expected to be dangerous.But what puzzles him is whether anyone will hear bubbles burst one after another in Canada’s real estate market, as the country’s household debt ratio has reached unprecedented highs.Please Visit: Leftbank condos location to Get Your VVIP Registration Today!
As the Bank of Montreal of Canada (BMO) points out, when the latest household debt ratio data are released, the current upward trend in Canadian household debt can be traced back to 26 years ago. The record of household debt shows no sign of slowing down.
Benjamin Reitzes, senior economist at the Bank of Montreal, said: “property in the Vancouver area appears to have cooled since the introduction of tax measures on foreign buyers, but the property market in the Toronto area remains strong, while the property market in other areas shows signs of improvement.”
At the same time, the Bank of Canada has begun to issue frequent warnings about the country’s severe household debt and the irrationally driven real estate market, but Canadians seem to turn a deaf ear to the central bank’s warnings.
In the Toronto area, for example, property prices have risen nearly 15% since the summer. At the same time, Stephen Poloz, governor of the Bank of Canada, repeatedly warned that property prices in the Toronto area were “in a situation that is difficult to match on any defined basis”. The National Bank of Canada Real Estate Price Index (Teranet-National Bank House Price Index) has been tracking real estate prices in Toronto. However, from the perspective of tracking, no six-month real estate prices have risen as fast as they did in the same period of this year. At the same time, the latest data released by Statistics Canada also show that Canada’s domestic household debt-to-income ratio hit an all-time high in the third quarter.
On Monday, the Bank of Canada posted a video on YouTube. The video echoes the semi-annual review of the financial system released by the central bank last Thursday. Joshua Slive, a senior policy adviser to the Bank of Canada, outlined the dangers posed by the country’s current domestic debt and inflated house prices. The combination of these two risks has the potential to destroy Canada’s domestic economy.
1. The Bank of Canada has pointed out that excessive household debt and rising property prices are at an unsustainable level. Although, as Joshua Slev observed, people are usually able to deal with this vulnerability for a certain amount of time.
2. That is, this vulnerability can be extended until a series of negative events are triggered by economic shocks. For example, a severe recession will lead to a “sharp rise” in unemployment.
3. Many families, especially those with the heaviest debt burden, will get themselves into trouble of not being able to repay their debts. As a result, some households will begin to default on their debts. In turn, banks and trust companies will foreclose on these families and try to sell them.
At the same time, as economic growth slows, new buyers will postpone their home purchases until the economy shows signs of recovery. Given the challenges already facing economic growth, this situation will “trigger a sharp fall in real estate prices”.
5. If house prices fall, it will push personal household wealth to shrink. Household wealth has received a huge boost during the housing boom over the past few years, and household consumer spending has been squeezed as a result. But under normal circumstances, household consumer spending is the most important driver of economic growth. Additional pressure on the financial sector will also be a drag on economic growth, as lending departments reduce the size of new loans. Joshua Slev did not use technical terms, but he described a real credit crisis.