Has Canadian House Price Growth Been Excessive?

Allen Head () and Huw Lloyd-Ellis

No 1331, Working Paper from Economics Department, Queen's University

Abstract: The dramatic rise in the ratio of Canada's average house price to average rent has led to speculation that there is a bubble in the Canadian housing market. Others have argued, however, that the currently high level of house prices may be rationalized by the low cost of financing, given the decline in interest rates over the last two decades. In this article, we assess these arguments through the lens of a simple asset pricing model applied to city-level data. We quantify the extent to which excess growth in Canadian house prices depends on the nature of the current regime governing real interest rates, expections of rent growth in different cities and variations in property taxes.

Keywords: House prices; rents; interest rates (search for similar items in EconPapers)
JEL-codes: G12 R10 R21 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2016-01
New Economics Papers: this item is included in nep-mac and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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https://www.econ.queensu.ca/sites/econ.queensu.ca/files/qed_wp_1331.pdf First version 2016 (application/pdf)

Related works:
Journal Article: Has Canadian house price growth been excessive? (2016)
Journal Article: Has Canadian house price growth been excessive? (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:qed:wpaper:1331

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