Has Canadian House Price Growth been Excessive?

Allen Head () and Huw Lloyd-Ellis

No 274657, Queen's Economics Department Working Papers from Queen's University - Department of Economics

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: Consumer/Household Economics; Financial Economics (search for similar items in EconPapers)
Pages: 41
Date: 2016-01
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Related works:
Journal Article: Has Canadian house price growth been excessive? (2016)
Journal Article: Has Canadian house price growth been excessive? (2016)
Working Paper: Has Canadian House Price Growth Been Excessive? (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:quedwp:274657

DOI: 10.22004/ag.econ.274657

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