A new report shows that Canada has the most overvalued property market out of 20 countries in the developed world.
The report, carried out by Deutsche Bank, found that when factors including historical property prices and rentals along with current average values and incomes are taken into consideration, home prices in Canada are 60 per cent overvalued.
Belgium was found to have the second most overvalued property markets, with prices in the European country 56 per cent overvalued, followed by New Zealand (51 per cent), Norway (49 per cent) and Australia (40 per cent).
Only 6 of the 20 countries covered in the report were deemed to have property markets in which home prices are undervalued. Those countries were Japan (where prices are -39 per cent undervalued), South Korea (-18 per cent), Germany (-15 per cent), Greece, United States (both -6 per cent) and Ireland (-1 per cent),
Although the report doesn’t go into detail with regards to the reasons why properties are so overvalued in Canada and Belgium, the Wall Street Journal suggests that: “Canada is very open to foreign investors, which means that in an age of unprecedented global liquidity cash-rich wealthy individuals who are looking for places to park their excess funds can do so in its housing market far more easily than in Japan, with its closed system.
“For its part, Belgium’s home prices could be distorted by soaring prices in Brussels as the European Union’s economic and financial troubles have inevitably increased the business of the EU and prompted an influx of diplomats into a city that functions as Europe’s capital.”
Earlier this week, Canada’s largest real estate company Re/max predicted that 2014 would be an extremely healthy year for the country’s property market, with home sales nationally expected to climb by 2 per cent to 475,000 units next year after a 3 per cent increase to well over 453,000 projected for 2013.
Article published 13th December 2013