Canada's housing agency says the country has the highest level of household debt in the G7, making its economy vulnerable to a global economic crisis.
In an analysis published Tuesday, Canada Mortgage and Housing Corp. deputy chief economist Aled ab Iorwerth said that the country's household debt has been rising"inexorably" due to rising home prices.
"While U.S. households reduced debt, Canadians increased theirs and this will likely continue to increase unless we address affordability in the housing market." While an upcoming CMHC report is expected to contain more information about how Canadians are coping with this year's higher interest rates, ab Iorewerth said the agency already sees"early warning signs" that more and more consumers are getting into financial trouble.
One way to reduce the risk, according to the CMHC, is to improve housing affordability in Canada — either through increasing housing supply or renovating and rebuilding the country's rental stock to be modern and attractive in order to prevent Canadians from feeling compelled to be homeowners.
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