On the surface, the comparisons between Australia and Canada are apt. Both are large, medium-population countries that are popular spots for immigration and capital flight. Both are particularly popular with Chinese investors.
Not surprisingly, there have been housing bubbles in both.
Where the divergence starts is in the past year where Canadian house prices have fallen and Australian prices have continued to rise substantially. That could reflect that Australian interest rates are more 'normal' compared to the past two decades while in Canada they're 'high'. It could also reflect relative growth, confidence or some other structural difference.
Or it could be a sign of things to come.
Canada's housing market has certainly corrected but hasn't crashed despite some hefty pain. The next two months though are where the rubber meets the suburban road. I'm seeing more and more houses hit the market, particularly new builds.
RBC has noticed the same, and highlights sluggish sales in February.
"Anyone expecting smooth sailing ahead for the housing market got a reality check in February," RBC writes today. "Month-to-month drops in home resales in several of Canada’s major markets were a reminder that very challenging affordability conditions still heavily constrain many buyers—despite emerging signs of a market turnaround in the previous two months,."
There is plenty of talk about buyers on the sidelines but there also might be sellers and as RBC highlighted Vancouver, Edmonton, Hamilton and Montreal where new listings rose 3-14% (Vancouver listings up 11% m/m and 31% y/y while Toronto sales fell 12% m/m).
The good news was that housing prices did tick up in Toronto.
"We think a vigorous, sustained recovery won’t take shape until interest rates fall more meaningfully—something we peg for the second half of 2024," RBC writes.
USD/CAD is up 31 pips to 1.3490 despite a strong Canadian jobs report today.
