[Written by FunHouses Guo Xing, Haofang.com]
On October 12, local time, the Federal Reserve Bank of the United States issued a report stating that Canadian house prices have risen by 25.6% in the past year. This is a unique record among the seven most developed industrial countries in the world in the past 30 years, and it is a few blocks away from other industrial countries.

30 years backwards from 2021 is 1991.

The Federal Reserve reported that since 1991, there has never been a phenomenon of soaring housing prices in developed economies like Canada.

The general economic theory believes that developed industrial countries are mature economies, and mature economies are like adults. Basically, there will be no open-ended rise in skill packages, but they may fall off a cliff in some ways.
So Canadian house prices are rising like a stimulant, and the Fed thinks this is a very dangerous signal.

Look at these two pictures to know what happened in the past 30 years and the past year.
Canadian house prices have stood out in the G7 since 2005, but they have continued to rise in proportion to other economies for more than a decade. After 2020, Canada once again pulled an almost vertical upward curve, which is even straighter than the epidemic curve. .
The key is do Canadians have so much money?
The Fed's data shows that it certainly doesn't.

Far aside, the minimum hourly wage in Washington State, the United States is $15, and the minimum hourly wage in BC, Canada is $15.2 Canadian dollars. If the Apple mobile phone is used as a reference, the purchasing power of hourly wages in the two places differs by nearly 30%.
Worse still, the housing price on one side of Hepingmen is twice as high as that on the other side, but the residents on both sides are separated by only a one-foot-high boundary marker. The same piece of land, the same beach, but house prices and consumption indexes are worlds apart.

The Fed stated that whether it is a horizontal comparison between the G7 or Canada's current and past ratios, the increase in housing prices cannot be explained by economic theory.

In the second quarter of 2021, house prices rose 6.89% month-on-month and 25.6% year-on-year. If there is no bubble in Canadian housing prices, it means that the other six advanced industrial countries are in deflation.
Regardless of the other five countries, Canada’s North American neighbor, the United States, can see that the peak annual increase in housing prices in the United States appeared in 2005, when it was 9.13%. For Americans, it has been sorrowful, but compared to Canada's housing price increase today, it is simply not worth mentioning.

The G7's third highest annual housing price increase occurred in 1989, when Italy achieved nearly American results.

The Fed bluntly said,
As a developed industrial country, Canada's management of its own currency system is one of the worst.
The Fed even believes that indulging housing prices to this level, it may not be possible for countries with multiple policy tools to work hard.
Huang Sanshui said that in the previous period, some media reported that US housing prices were also rising sharply, but the so-called big increase in the United States was a 3.45% increase in housing prices in the second quarter of 2021 and a year-on-year increase of 7.75%. This is already the second highest house price increase in American history, second only to the peak in 2005.

But who can say that the US economy is not recovering as fast as Canada?

Therefore, the Fed believes that Canada's housing price increase is so high that it cannot be understood.

At the end of the report, the Fed pointed out that the Bank of Canada's indulgent credit policy has led to a systemic collapse in the Canadian real estate market.
The biggest suspense now is that if the Bank of Canada tightens its credit policy, Canadian house prices will rise or fall in the future. If they fall, how will they fall?