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Canada has the Most Overvalued Housing Market in World [Chart]

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Canada has the Most Overvalued Housing Market in World [Chart]

Canada has the Most Overvalued Housing Market in World [Chart]

The Chart of the Week is a weekly feature in Visual Capitalist on Fridays.

In every inflating bubble, there’s usually two camps. The first group points out various metrics suggesting something is inherently unsustainable, while the second reiterates that this time, it is different.

After all, if everyone always agreed on these things, then no one would do the buying to perpetuate the bubble’s expansion. The Canadian housing bubble has been no exception to this, and the war of words is starting to heat up.

On one side of the ring, we have The Economist, that came out last week saying Canada has the most overvalued housing market in the world. After crunching the data in housing markets in 26 nations, The Economist has determined that Canada’s property market is the most overvalued in terms of rent prices (+89%), and the third most overvalued in terms of incomes (+35%). They have mentioned in the past that the market has looked bubbly for some time, but finally Canada is officially at the top of their list.

Of course, The Economist is not the only fighter on this side of the ring.

Just over a month ago, the IMF sounded a fresh alarm on Canada’s housing market by saying that household debt is well above that of other countries. Meanwhile, seven in ten mortgage lenders in Canada have expressed “concerns” that the real estate sector is in a bubble that could burst at any time. Deutsch Bank estimates the market is 63% overvalued and readily offers seven reasons why Canada is in trouble. Even hedge funds are starting to find ways to short the market in anticipation of an upcoming collapse. Canada’s housing situation could give rise to the world’s next Steve Eisman, Eugene Xu, or Greg Lippmann.

On the opposing side of the ring, who will contend that the Canadian housing market is just different this time? Hint: look to the banks and government.

Stephen Harper, Canada’s Prime Minister, has tried to dispel fears. He recently told a business audience in New York that he didn’t anticipate any housing crisis in Canada.

Just this week, the Bank of Canada also tried its best to deflate housing bubble fears. “We don’t believe we’re in a bubble,” says Stephen Poloz, the Bank’s Governor. “Our housing construction has stayed very much in line with our estimates of demographic demand.”

Poloz suggested that housing costs do not necessarily have to contract to match the incomes of Canadians. Instead, he expects growth in the economy to raise wages and make housing more affordable.

Strangely enough, by the Bank of Canada’s own estimate, the housing market is overvalued by as much as 30%. It is hard for housing to become more affordable when prices are rising in double digits in a year. Combine this with the fact that household debt rates keep setting new records, and one side of the fight might get tilted sooner than later.

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Politics

Mapped: The Countries With the Most Military Spending

Global military spending surpassed $1.9 trillion in 2019, but nearly 75% of this total can be traced to just 10 countries.

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Mapped: The Countries With the Most Military Spending

Whether it’s fight or flight, there’s a natural tendency of humans to want to protect themselves.

In this day and age, this base instinct takes the form of a nation’s expenditures on armies and armaments, towards an end goal of global security and peacekeeping.

This graphic from the Stockholm International Peace Research Institute (SIPRI) delves into the top military spenders as of 2019.

Top 10 Biggest Military Spenders

Let’s first take a look at the overall growth trends. The world’s military spending grew by 3.6% year-over-year (YoY)—currently the highest rate this decade—to surpass $1.9 trillion in 2019.

While just 10 countries are responsible for nearly 75% of this amount, the U.S. alone made up the lion’s share with 38% of the global total. In fact, its YoY rise in spending alone of $49.2 billion rivals Germany’s entire spending for the same year.

Naturally, many questions rise about where this money goes, including the inevitable surplus of military equipment, from night vision goggles to armored vehicles, that trickles down to law enforcement around the nation.

Here’s how world’s top 10 military spenders compare against each other:

CountryMilitary Spending ('19)YoY % changeMilitary Spending as % of GDP ('19)
U.S. 🇺🇸$731.8B+5.3%3.4%
China 🇨🇳$261.1B+5.1%1.9%
India 🇮🇳$71.1B+6.8%2.4%
Russia 🇷🇺$65.1B+4.5%3.9%
Saudi Arabia 🇸🇦$61.2B-16.0%8.0%
France 🇫🇷$50.1B+1.6%1.9%
Germany 🇩🇪$49.3B+10.0%1.3%
UK 🇬🇧$48.7B0.0%1.7%
Japan 🇯🇵$47.6B-0.1%0.9%
South Korea 🇰🇷$43.9B+7.5%2.7%
Global Total$1.92T+3.6%2.2%

China and India, currently embroiled in a border dispute, have upped the ante for military spending in Asia. India is also involved in clashes with its neighbor Pakistan for territorial claim over Kashmir—one of the most contested borders in the world.

India’s tensions and rivalry with both Pakistan and China are among the major drivers for its increased military spending.

—Siemon T. Wezeman, SIPRI Senior Researcher

Germany leads among the top spenders in terms of highest YoY military spending increases. According to SIPRI, this is a preemptive measure in the face of perceived growing Russian threats.

These concerns may not be unfounded, considering that Russia comes in fourth for defense expenditures on the global stage—and budgets more towards military spending than any country in Europe, at 3.9% of its total GDP.

Military Spending as a Share of GDP

Looking more closely at the numbers, it’s clear that some nations place a higher value on defense than others. A country’s military expenses as a share of GDP is the most straightforward expression of this.

How do the biggest spenders change when this measure is taken into consideration?

Military Spending by GDP Share

Eight of the 15 countries with the highest military spending as a percentage of GDP are concentrated in the Middle East, with an average allocation of 4.5% of a nation’s GDP.

It’s worth noting that data is missing for various countries in the Middle East, such as Yemen, which has been mired in a civil war since 2011. While SIPRI estimates that combined military spending in the region fell by 7.5% in 2019, these significant data gaps mean that such estimates may not in fact line up with the reality.

Explore the full data set of all available countries below.

Country2019 Spending, US$B2019 Share of GDP
U.S.$731.753.4%
China$261.081.9%
India$71.132.4%
Russia$65.103.9%
Saudi Arabia$61.878.0%
France$50.121.9%
Germany$49.281.3%
UK$48.651.7%
Japan$47.610.9%
South Korea$43.892.7%
Italy$26.791.4%
Australia$25.911.9%
Canada$22.201.3%
Israel$20.475.3%
Turkey$20.452.7%
Spain$17.181.2%
Iran$12.622.3%
Netherlands$12.061.3%
Poland$11.902.0%
Singapore$11.213.2%
Taiwan$10.421.7%
Algeria$10.306.0%
Pakistan$10.264.0%
Colombia$10.083.2%
Kuwait$7.715.6%
Indonesia$7.670.7%
Iraq$7.603.5%
Thailand$7.321.3%
Norway$7.001.7%
Oman$6.738.8%
Mexico$6.540.5%
Sweden$5.921.1%
Greece$5.472.6%
Ukraine$5.233.4%
Switzerland$5.180.7%
Romania$4.952.0%
Belgium$4.820.9%
Denmark$4.561.3%
Portugal$4.511.9%
Bangladesh$4.361.3%
Finland$3.971.5%
Malaysia$3.771.0%
Egypt$3.741.2%
Morocco$3.723.1%
Philippines$3.471.0%
South Africa$3.471.0%
Austria$3.240.7%
Argentina$3.140.7%
New Zealand$2.931.5%
Czechia$2.911.2%
Brazil$2.731.5%
Peru$2.731.2%
Lebanon$2.524.2%
Bulgaria$2.133.2%
Jordan$2.034.7%
Hungary$1.901.2%
Slovakia$1.871.8%
Nigeria$1.860.5%
Azerbaijan$1.854.0%
Ecuador$1.772.3%
Kazakhstan$1.771.1%
Sri Lanka$1.671.9%
Angola$1.471.6%
Bahrain$1.413.7%
Uruguay$1.222.0%
Kenya$1.151.2%
Chile$1.151.8%
Serbia$1.142.2%
Ireland$1.110.3%
Lithuania$1.082.0%
Croatia$1.011.7%
Tunisia$1.002.6%
Tanzania$0.801.3%
Belarus$0.781.2%
Sudan$0.721.6%
Latvia$0.712.0%
Armenia$0.674.9%
Estonia$0.662.1%
Uganda$0.652.1%
Dominican Republic$0.620.7%
Cambodia$0.602.3%
Bolivia$0.601.4%
Slovenia$0.571.1%
Zimbabwe$0.550.7%
Ethiopia$0.550.6%
Côte d’Ivoire$0.541.1%
Botswana$0.522.8%
Mali$0.472.7%
Luxembourg$0.430.6%
Nepal$0.431.6%
Cameroon$0.421.1%
Paraguay$0.421.0%
Brunei$0.423.3%
Namibia$0.413.0%
Honduras$0.401.6%
Cyprus$0.401.6%
Burkina Faso$0.362.4%
DRC$0.350.7%
Senegal$0.351.5%
Guatemala$0.340.4%
El Salvador$0.321.2%
Georgia$0.322.0%
Republic of Congo$0.302.7%
Zambia$0.291.2%
Gabon$0.271.6%
Jamaica$0.271.6%
Chad$0.242.2%
Ghana$0.230.4%
Afghanistan$0.231.2%
Albania$0.201.3%
Guinea$0.202.0%
Bosnia-Herzegovina$0.180.9%
Niger$0.171.8%
Togo$0.173.1%
Trinidad & Tobago$0.170.7%
Mauritiana$0.162.8%
North Macedonia$0.151.2%
Mozambique$0.140.9%
Krygyzstan$0.121.5%
Guyana$0.121.7%
Rwanda$0.121.2%
Mongolia$0.100.7%
Montenegro$0.091.6%
eSwatini$0.091.8%
South Sudan$0.093.4%
Malta$0.800.6%
Fiji$0.081.6%
Nicaragua$0.080.7%
Papua New Guinea$0.080.4%
Madagascar$0.080.6%
Benin$0.070.7%
Malawi$0.070.9%
Kosovo$0.070.8%
Burundi$0.061.8%
Lesotho$0.041.5%
Moldova$0.040.4%
Timor-Leste$0.031.0%
Central African Republic$0.031.5%
Sierra Leone$0.030.7%
Seychelles$0.021.3%
Belize$0.021.2%
Mauritius$0.020.2%
Liberia$0.020.5%
Gambia$0.010.8%
Cape Verde$0.010.5%
Haiti$00.0%
Costa Rica$00.0%
Iceland$00.0%
Panama$00.0%

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Politics

Basic Income Experiments Around the World

Amid the pandemic, the idea of Universal Basic Income has been gaining steam with policymakers. Where has it been tried, and has it worked?

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Universal-Basic-Income-Share

Basic Income Experiments Around the World

What if everyone received monthly payments to make life easier and encourage greater economic activity? That’s the exact premise behind Universal Basic Income (UBI).

The idea of UBI as a means to both combat poverty and improve economic prospects has been around for decades. With the COVID-19 pandemic wreaking havoc on economies worldwide, momentum behind the idea has seen a resurgence among certain groups.

Of course, the money to fund basic income programs has to come from somewhere. UBI relies heavily on government budgets or direct funding to cover the regular payments.

As policymakers examine this trade-off between government spending and the potential benefits, there is a growing pool of data to draw inferences from. In fact, basic income has been piloted and experimented on all around the world—but with a mixed bag of results.

What Makes Basic Income Universal?

UBI operates by giving people the means to meet basic necessities with a regular stipend. In theory, this leaves them free to spend their money and resources on economic goods, or searching for better employment options.

Before examining the programs, it’s important to make a distinction between basic income and universal basic income.

attributes of ubi programs

With these parameters in mind, and thanks to data from the Stanford Basic Income Lab, we’ve mapped 48 basic income programs that demonstrate multiple features of UBI and are regularly cited in basic income policy.

Some mapped programs are past experiments used to evaluate basic income. Others are ongoing or new pilots, including recently launched programs in Germany and Spain.

Recently, Canada joined the list as countries considering UBI as a top policy priority in a post-COVID world. But as past experiments show, ideas around basic income can be implemented in many different ways.

Basic Income Programs Took Many Forms

Basic income pilots have seen many iterations across the globe. Many paid out in U.S. dollars, while others chose to stick with local currencies (marked by an asterisk for estimated USD value).

ProgramLocationRecipientsPayment FrequencyAmount ($US/yr)Dates
Abundant Birth ProjectSan Francisco, U.S.100Monthly$12,000-$18,000TBD
Alaska Permanent Fund DividendAlaska, U.S.667,047Annually$1,000-$2,0001982-Present
B-MINCOMEBarcelona, Spain1,000Monthly$1,392-$23,324*2017-2019
Baby's First YearsNew York, U.S.1,000Monthly$240-$3,9962017-2022
Baby's First YearsNew Orleans, U.S.1,000Monthly$240-$3,9962017-2022
Baby's First YearsOmaha, U.S.1,000Monthly$240-$3,9962017-2022
Baby's First YearsTwin Cities, U.S.1,000Monthly$240-$3,9962017-2022
Basic Income for FarmersGyeonggi Province, South Korea430,000Annually$509*TBD
Basic Income Grant (BIG) PilotOmitara, Namibia930Monthly$163*2008-2009
Basic Income ProjectNot Disclosed3,000Monthly$600-$12,0002019-Present
Eastern Band of Cherokee Indians Casino Revenue FundJackson County and area, NC, U.S.15,414Biannually$7,000-$12,0001996-Present
Eight Pilot ProjectBusibi, Uganda150Monthly$110-$219*2017-2019
Evaluation of the Citizens' Basic Income ProgramMaricá, Brazil42,000Monthly$360*2019-Present
Finland Basic Income ExperimentFinland2,000Monthly$7,793*2017-2018
Gary Income Maintenance ExperimentsGary, U.S.1,782Monthly$3,300-$4,3001971-1974
Give DirectlyWestern Kenya20,847Monthly or Lump Sum$2742017-2030
Give DirectlySaiya County, Kenya10,500Lump Sum$3332014-2017
Give DirectlyRarieda District, Kenya503Monthly or Lump Sum$405-$1,5252011-2013
Human Development FundMongolia2,700,000Monthly$1872010-2012
Ingreso Mí­nimo VitalSpain850,000Monthly$6,535-$14,358*2020-Present
Iran Cash Transfer ProgrammeIran75,000,000Monthly$482010-Present
Madhya Pradesh Unconditional Cash Transfers ProjectMadhya Pradesh, India5,547Monthly$26-$77*2011-2012
Magnolia Mother's TrustJackson, MS, U.S.80Monthly$12,0002019-Present
Manitoba Basic Annual Income ExperimentWinnipeg, Canada1,677Monthly$3,842-$5,864*1975-1978
Manitoba Basic Annual Income ExperimentDauphin, Canada586Monthly$3,842-$5,864*1975-1978
My Basic IncomeGermany120Monthly$17,160*2020-2023
New Jersey Income Maintenance ExperimentJersey City, U.S.1,357BiweeklyVaried1968-1972
New Jersey Income Maintenance ExperimentPaterson, NJ, U.S.1,357BiweeklyVaried1968-1972
New Jersey Income Maintenance ExperimentPassaic, NJ, U.S.1,357BiweeklyVaried1968-1972
New Jersey Income Maintenance ExperimentTrenton, NJ, U.S.1,357BiweeklyVaried1968-1972
New Jersey Income Maintenance ExperimentScranton, PA, U.S.1,357BiweeklyVaried1968-1972
Ontario Basic Income PilotHamilton and area, Canada2,748Monthly$13,112-$18,930* (-50% income)2017-2018
Ontario Basic Income PilotThunder Bay and area, Canada1,908Monthly$13,112-$18,930* (-50% income)2017-2018
Ontario Basic Income PilotLindsay, Canada1,844Monthly$13,112-$18,930* (-50% income)2017-2018
Preserving Our DiversitySanta Monica, U.S.250Monthly$7,836-$8,9642017-Present
Quatinga VelhoQuatinga, Mogi das Cruces, Brazil67Monthly$197*2008-2014
Rural Income Maintenance ExperimentDuplin County, NC, U.S.810MonthlyVaried (NIT)1970-1972
Rural Income Maintenance ExperimentIowa, U.S.810MonthlyVaried (NIT)1970-1972
Scheme $6,000Hong Kong, China4,000,000Annually$771*2011-2012
Seattle-Denver Income Maintenance ExperimentSeattle, U.S.2,042Monthly$3,800-$5,6001971-1982
Seattle-Denver Income Maintenance ExperimentDenver, U.S.2,758Monthly$3,800-$5,6001971-1982
Stockton Economic Empowerment DemonstrationStockton, U.S.125Monthly$6,0002019-Present
TBDNewark, U.S.TBDMonthlyTBDTBD
Transition-Age Youth Basic Income Pilot ProgramSanta Clara, CA, U.S.72Monthly$12,0002020-2021
Wealth Partaking SchemeMacau, China700,600Annually$750-$1,1502008-Present
Youth Basic Income ProgramGyeonggi Province, South Korea125,000Quarterly$848*2018-Present
Citizen's Basic Income PilotScotlandTBDMonthlyTBDTBD
People's Prosperity Guaranteed Income Demonstration PilotSt. Paul, U.S.150Monthly$6,0002020-2022

Many of the programs meet the classical requirements of UBI. Of the 48 basic income programs tallied above, 75% paid out monthly, and 60% were paid out to individuals.

However, for various reasons, not all of these programs follow UBI requirements. For example, 38% of the basic income programs were paid out to households instead of individuals, and many programs have paid out in lump sums or over varying time frames.

Interestingly, the need for better understanding of basic income has resulted in many divergences between programs. Some programs were only targeted at specific groups like South Korea’s Basic Income for Farmers program, while others like the Baby’s First Years program in the U.S. have been experimenting with different dollar amounts in order to evaluate efficiency.

Other experiments based payments made off of the total income of recipients. For example, in the U.S., the Rural Income and New Jersey Income Maintenance Experiments paid out using a negative income tax (return) on earnings, while recipients of Canada’s Ontario Basic Income Pilot received fixed amounts minus 50% of their earned income.

Varying Programs with Varied Results

So is basic income the real deal or a pipe dream? The results are still unclear.

Some, like the initial pilots for Uganda’s Eight program, were found to result in significant multipliers on economic activity and well-being. Other programs, however, returned mixed results that made further experimentation difficult. Finland’s highly-touted pilot program decreased stress levels of recipients across the board, but didn’t positively impact work activity.

The biggest difficulty has been in keeping programs going and securing funding. Ontario’s three-year projects were prematurely cancelled in 2018 before they could be completed and assessed, and the next stages of Finland’s program are in limbo.

Likewise in the U.S., start-up incubator Y Combinator has been planning a $60M basic income study program, but can’t proceed until funding is secured.

A Post-COVID Future for UBI?

In light of COVID-19, basic income has once again taken center stage.

Many countries have already implemented payment schemes or boosted unemployment benefits in reaction to the pandemic. Others like Spain have used that momentum to launch fully-fledged basic income pilots.

It’s still too early to tell if UBI will live up to expectations or if the idea will fizzle out, but as new experiments and policy programs take shape, a growing amount of data will become available for policymakers to evaluate.

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