Canada housing agencies data reveals, Canada is now the highest of the G7 countries with regard to household debt. The amount due by Canadian households are much higher, than the countries entire GDP. High home prices are to be blamed for the ballooning debt, said by Canada mortgage and housing cooperation.
Within the last 10 years, household debt in the US and the UK by comparison has shrunk. According to report which was released recently, Canadians were warned by the Canada’s housing agency, that due to the high amount of debt they owe, they would not be able to weather a recession.
The agency’s Deputy Chief Economist, Aled ab Lorwerth, said since Canada is facing a very high levels of household debt and highest in the G7- which makes the economy vulnerable to any global economic crisis.
As house prices increase in Canada, household debt also increases. 75% of Canada’s households debt comes from mortgages. Was stated in Mr. ab Lorwerth report.
He also informed that, in Canada, if they want to become home owners, long-term establishing housing affordability will be crucial to reduce household debt,
According to the Canada Real Estate Association, the average home price of Canada is C$716,083. Toronto which is the most popular city in Canada average about C$1.15m.
Home prices are the highest in British Columbia, Vancouver. Where the average price tag for a property is around 1.29m.
Among the top 10 most unaffordable cities in the world, Vancouver and Toronto consistently ranked. Since 2011 the average value of a Canadian home has doubled, when houses were valued at around C$352, 000.
As of 2021, Canada’s household debt is high by 7% than the country’s entire GDP. This increase was noticed in 2010, when household debt was about 5% lower than Canada’s GDP.
In 2008 when compared, household debt in the US reduced from 100% of the country’s GDP and to approximately 75% in 2021. In 2010 the UK’s household debt was a share of its GDP also fell from 94% to 86% in 2021.
Mr. ab Lorwerth, said while US households reduced debt, Canadians increased theirs and this will likely to continue to increase unless we address affordability in the housing market.
Only Australia has a higher household debt rate as a share of GDP (119%) when compared with other Western nations.
The government of Canada is under pressure, to address the growing issue of housing unaffordability.
Early this year, a two-year ban imposed on foreigners purchasing homes in the country was enacted by Canada, to attempt to ease unaffordability.
To increase Canada’s housing supply, some have called on officials to enact measures, as the Canadian population has increased by a record of more than a million people in 2022.
