US v. Canada House Prices. A Widening gap. Canadians may apparently be upset about this

[Account Closed]

In terms of the widening gap between US and Canadian house prices since 2006, this seems to be a strange economic phenomenon. 

It is almost as if the US prices are artificially suppressed as both markets appear to have decoupled since 2006. However, the house price widening between Britain and the US is much worse than the widening between Canada and the US.

Tempted to say the market might have to correct in Canada but that seems to be only if you compare it to the US market. The housing markets in Britain and Spain actually moved much stronger than that of Canada compared to the US.

There has to be a variable the explains the pattern and behavior.

http://www.cbc.ca/news/politics/canada-u-s-price-gap-complaints-could-soon-trigger-investigations-1.2865235

http://www.huffingtonpost.ca/2013/04/23/canada-house-prices-us_n_3139918.html

http://www.economist.com/blogs/dailychart/2011/11/global-house-prices

[James DeRoest]

I know the UK market quite well, and it is viciously over priced. 

But people really don't talk about why it happened.

First of all, the Chancellor to the exchequer in 1998 raided the pension companies, so lots of people in their 40s-50s cashed out equity on their primarily home and bought property to rent out.

Secondly, through 13 years of an unchecked left government, immigration was left largely unchecked, and 5 years of a Tory government didn't bring it back in check either. This led to a shortage of housing stock.

Thirdly, building in the UK is prohibitively expensive. I have friends looking to build two homes in a very nice area at the moment. After spending tens of thousands in application fees to get planning permission, the day that the first foundation is dug for the two properties, they will owe the council another $80,000 in taxes. The council even delayed final planning application 1 extra day so that the law could change so the council could net the extra $80k.

Which means that the homes they are building won't be "entry level" $400k homes, but rather million dollar homes instead. This does not help the market in the slightest.

So building is left to developers who have to make higher and higher percentages of developments "affordable" housing, which again, forces many builders out of the business as they can't get the returns needed.

Now, anyone see any parallels to the US in all this?