Canada has built fewer new homes relative to population growth than other advanced economies, but this alone cannot explain the much larger rise in house prices during the last decade. Looser credit conditions have played the dominant role by far, with mortgage growth accelerating sharply during the pandemic and the cost of that debt falling as households shifted to variable rate mortgages. As a result, the commonly held view that house prices will remain well above their pre-pandemic level could prove too optimistic if lenders tighten credit more substantially.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to gain:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services