Highest Household Debt In G7: Canada
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. Canadian homes have seen a huge rise in value since 2011. The average value has more than doubled.
Canada's housing agency's data revealed that household debt is now highest in the G7.
Canadian households owe more money than the entire GDP of Canada.
Expensive homes are causing a lot of debt, according to the Canada Mortgage and Housing Corporation.
In the past decade, household debt has decreased in the US and the UK.
Canada's housing agency released a report on Tuesday. The report warned that Canadians may not survive a recession. This is due to the high levels of debt they owe.
Canada's household debt levels are very high. This makes the economy vulnerable to global economic crisis. Canada has the highest household debt levels in the G7. This was said by Aled ab Iorwerth, the agency's deputy chief economist.
Mr ab Iorwerth's report says that 75% of Canada's household debt is due to mortgages. When home prices go up in Canada, household debt also increases.
Mr. ab Iorwerth said bringing back affordable housing in Canada is necessary to decrease household debt so people can buy homes. It's vital for the long term goal.
Houses in Canada cost C$716,083 on average. Toronto homes cost more at C$1.15m. This information comes from the Canada Real Estate Association.
Vancouver, British Columbia has the highest home prices. The average price for a property is C$1.29m.
Toronto and Vancouver are both very expensive cities. They are usually in the top 10 rankings for unaffordability.
In 2011, Canadian homes were valued at C$352,000. Now, the average value has more than doubled. This means homes are worth more than C$704,000 on average.
In 2021, Canada's household debt is more than the GDP by 7%. This was different in 2010 when the debt was 5% lower than the GDP.
In the US, household debt used to be 100% of GDP in 2008. But now, it dropped to around 75% in 2021. In the UK, it was once 94% of GDP in 2010. Now, it is at 86% in 2021.
Mr ab Iorwerth said Canadians are increasing their debt while US households are reducing theirs. This trend in Canada could continue to worsen unless they address housing affordability issues.
Australia has the second-highest household debt rate compared to other Western nations. The household debt rate is 119% of their GDP.
The Canadian government is feeling pressure to solve the problem of expensive housing. To try and help, there is now a rule that foreigners can't buy homes in Canada for two years.
Officials should increase Canada's housing supply due to the country's population increase. More than one million people came to Canada in 2022.
Buying a house in Canada takes 30 years. Why? Because of the high prices. Houses in Canada are very expensive, and it takes a long time to save up enough money to buy one. In addition to this, the mortgage process is very strict, which means it's difficult to get approved. All of these factors add up to make it a long and difficult process to buy a house in Canada.
