Hedge fund investors, many of them survivors of the U.S. subprime crisis in the late 2002, are betting against the current Canadian housing boom. They are sounding the alarm about the market’s inability to sustain itself, pointing to recent history that does not augur well for government’s artificial measures to support a system and its boom.
The analysis, reports the Financial Times, is that of leading economists and industry players, among them economic blogger Ben Rabidoux – one of the first to air the concern – Mark Hanson, investor Steve Eisman and Robert Shiller.
They cite the following trends as a precursor to a Canadian housing bust: the 38 per cent increase of Canadian home prices; low interest rates; government support for mortgages that passes the risk onto the Canadian taxpayer; inadequate restrictions on bank lending; and the current debt binge of homeowners.
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