Canada's Real Estate: A Bubble About to Burst?

I kinda hope so. Out here in Calgary, property values are waaay above what they should be. That, and I'm looking to buy a new place but there's no way in heck I could justify these prices.

I think in Vancouver, you have a situation that is not completely under local control. You have got a lot of overseas buyers, especially from Asia, who often pay in cash. They are usually interested in luxury properties but the price effect will filter down to properties across the board. This is what is happening in a number of international cities. The most extreme cases are Hong Kong and London but this is also seen in many other cities such as Singapore, Sydney and New York.

In Hong Kong right now, there is real anger against the Mainland Chinese snapping up properties indiscriminately and leaving many unoccupied. Some would go as far as to want a purchasing ban on them. This is responsible for house prices here going up by more than 70% in the past 30 months. Now over $1000 per sq ft seems to be standard in the city. This is extremely galling considering Hong Kong has some of the lowest wages around in the developed world and there are literally people living in cages. In London, you have got wealthy Russian, East European and Middle East who are making indiscriminate purchase of luxury properties in Central London.

The government has imposed a 20% profit tax on the whole value of the property if is resold within 6 months. Also for luxury properties, buyers will have make a down payment of at least 50%. However, this is not working well as the Mainland Chinese quite often pays in cash.