The financial media have commented extensively on the rise of home prices in Canada, drawing on the ratio of incomes to home prices. (See for example the Economist Aug 31st 2013, Global House Prices: Mixed Messages and Globe and Mail Sept 5th House prices in Canada’s major cities setting hot pace, but for how long?)

The problem with the traditional measures is that they overlook two critical variables: the now historically low level of mortgage rates; and the influence that appreciated prices have in contributing to further price inflation, a compounding effect that reinforces and exacerbates price gains.

For full brief see Why Canadian home prices continue to rise