Canada among 12 most overpriced housing markets in the world Read more: http://www.f

[jesseps]

The U.S. housing market may have crashed, but bubbles around the world keep blowing.

 

Prices in some of the world's major real estate markets continue to be inflated by real reasons, like scarcity, and by less savory realities, like easy credit and speculation.

 

The Economist has broken down which markets are most over-inflated, by comparing rental prices to sale prices of properties.

 

This reflects what the cash flow is on a potential investment property versus the underlying asset value. If you don't get much cash out of the rental, the property purchase makes less and less sense.

 

Beyond the rent to price ratio, we've included some detail on each market that may explain why it's due for a correction, continued growth, or is a bubble ready to pop.

 

(Courtesy of The Financial Post)

 

Courtesy of The Economist

 

Overvalued by: 23.9%

Year-over-year increase: 4.5%

Percent change, 1997-2010: 70%

 

Is it a bubble? From a macro view, Canada is in a real estate bubble because it is experiencing rapid housing market valuation growth due to mis-allocation of capital.

 

But, the country has a currency that is strong, backed by rising commodity prices, and industry in commodities that is growing.

 

So this may be a bubble, but as long as commodity price inflation remains, it is likely to continue

 

(Courtesy of the Business Insider)

Modifié 2 novembre 2010 par jesseps