Stephen Harper on the housing market: What bubble?

Stephen Harper on the housing market: What bubble?

Fact check: Stephen Harper in conversation with 570News Kitchener

Stephen Harper speaks with President Hollande on January 16, 2013. (PMO/Flickr)

Stephen Harper speaks with President Hollande on January 16, 2013. (PMO/Flickr)

When Prime Minister Stephen Harper’s campaign stopped in St. Jacobs, Ont., the Conservative leader called into nearby 570News Kitchener for eight-minute chat on F-35 fighter jets, the national housing market and the proper response to Syria’s refugee crisis. Interviewer Eric Drozd asked about the spectre of a housing bubble. He referenced a Maclean’s story where Business Editor Jason Kirby reported that half of all new homebuyers who borrow from their RRSPs to finance their home purchases fail to make their annual repayments. The Prime Minister insisted that Canada’s housing market was “very solid.”

Here’s the clip of the full interview.

What Harper said on the housing market

Harper: “I know everybody points out that debt levels, mortgage borrowing are way up. It’s up because interest rates are low. Asset levels relative to income are actually way up in this country…”

Analysis: Harper is correct that net worth relative to income is rising—a steady increase almost uninterrupted since the end of the last recession. The Canadian pattern is very similar to the trend south of the border—except that we experienced nowhere near as strong a correction as our American neighbours.

Nick-household net worthincome

Harper: “…and delinquency on mortgage loans, debt-servicing costs are at near-record lows in this country. Contrary to mythology, while there’s no doubt there are some people who are overextended, the Canadian housing market is very strong.”

Analysis: Delinquency rates may be low, as Harper asserts. But is that statistic evidence of a strong housing market? Ben Rabidoux, the president of market research firm North Cove Advisors, is skeptical. Rabidoux was dismissive of that logic last year, and tweeted as much.


As for those record-low debt servicing levels, data backs up Harper’s claim there, too—but only if you restrict that calculation to interest payments. Nick-debt-servicing costs When Statistics Canada published data that incorporated repayment of principal into the calculation of its debt-service ratio, observers wondered what took the agency so long.


Harper: “More Canadians own their house today than ever before, and I think the combination of job creation we’ve had, optimism people have for the future, and low rates have enabled a lot of Canadians to expand their participation in the housing market. And I think that’s a positive thing overall.”

Analysis: It’s true that Canada’s home ownership rate is higher than ever, but more Americans than ever owned their own homes before the massive correction that rocked the U.S. housing market before the great recession. The U.S. home ownership rate is still falling, to this day.

Nick Canada homeownership rate

Nick- US homeownership rate