Which ends first, the Canadian housing bubble, the Australian one, or the Chinese one? Here are some key stress-points in the Chinese housing economy:
- Canada’s real estate prices have increased on average 40% [questionable, see below] in the last year while incomes have dropped.
- Canadian residential real estate is now worth more today than it was pre-Lehman. There are now more dwellings built in Canada (assuming, as the Canadian government does, that an average of 2.3 people live in each dwelling) than the population of Canada.
- Canadian consumers have racked up enormous debts while interest rates have been low over the past 20 months.
- Personal bankruptcies are at record levels now in Canada when interest rates are still at historical lows. # In Vancouver, people now spend 68% of their disposable income on housing. In Toronto, people spend 44% of their disposable income on housing. (Keep in mind that the China bears were complaining that it was unsustainable that some Chinese in Beijing and Shanghai were spending more than 30% of their disposable income on housing.)
The first and fourth points seem the most ominous, in our view.
UPDATE: Not sure how The Street calculated their average price change. Here’s the latest change in average price via CREA:
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