Canada’s Excessive House Purchases Raise Questions About Market Stability
The article discusses the current state of Canada’s economy, highlighting concerns about the country’s reliance on housing investment and its potential impact on competitiveness. Here are the key points:
- Residential investment is a large part of GDP: Statistics Canada data shows that residential investment has rarely been a bigger part of the overall economy.
- Housing market dominance: This suggests that houses are becoming a magnet for precious investment dollars, which could be put to more productive uses.
- Comparison with Australia: The article notes that while Australia also has a love of housing, its GDP figures show a lower share of residential investment compared to Canada.
- Real-estate dominance is bad for competitiveness: Excessive investment in housing can lead to reduced productivity and competitiveness.
- Kevin Carmichael’s analysis: The author suggests that Canada is buying too much house, implying that the country should diversify its economy beyond real estate.
The article concludes by raising concerns about the long-term implications of Canada’s reliance on housing investment, including:
- Reduced competitiveness
- Diversification away from more productive sectors (e.g., intellectual property)
- Potential market instability
The author encourages readers to sign up for FP Economy Newsletter for more great stories.
