Assessing House Prices in Canada

IMF Working Papers, November 15, 2019

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Assessing House Prices in Canada

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Bibliographic details

• Authors: Michal Andrle, Miroslav Plašil
• Published: November 15, 2019
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9781513519180.001

Summary

• Paper assesses house prices in 11 Canadian Census Metropolitan Areas (CMA) using the borrowing-capacity and the net-present-value approaches.
• Results indicate that by the end of 2018, house prices in most metropolitan areas are aligned with macroeconomic fundamentals.
• House prices in Hamilton, Toronto, and Vancouver have increased beyond the values implied by the fundamentals.
• Authors: Michal Andrle, Miroslav Plašil
• Date: November 15, 2019

Methods

• Approaches used:
  • Borrowing-capacity approach
  • Net-present-value approach

Key findings

• Geographic coverage: 11 Canadian Census Metropolitan Areas (CMA).
• Timing: assessment results reported as of the end of 2018.
• Alignment with fundamentals:
  • Most metropolitan areas: house prices aligned with macroeconomic fundamentals.
  • Specific overvaluation: Hamilton, Toronto, and Vancouver—house prices increased beyond fundamentals.

Policy-relevant subjects and analytical focus

• Subject areas listed:
  • Financial institutions
  • Housing
  • Housing prices
  • Inflation
  • Mortgages
  • National accounts
  • Personal income
  • Prices
• Keywords indicating analytical elements:
  • borrowing capacity, condominium price, cost of equity, financial stability, horizon mortgage rate, house price assessment, house prices, household income, Housing, Housing prices, income, income growth, Inflation, interest rate, interest rate decline, mortgage interest rate, mortgage rate, mortgage rate dynamics, mortgage rates decline, Mortgages, net rental income, Personal income, price, price correction, valuation, WP

Note on interpretation

• Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

IMF Working Paper: "Assessing House Prices in Canada" (Michal Andrle and Miroslav Plašil), November 15, 2019.

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