The Economist wonders whether Canada is headed for a US-style housing collapse noting that the degree to which houses are overvalued there is above what US house prices were at the peak of the bubble:
Based on the average of the two measures, home prices are overvalued by about 25% or more in Australia, Belgium, Canada, France, New Zealand, Britain, the Netherlands, Spain and Sweden (see table). Indeed, in the first four of those countries housing looks more overvalued than it was in America at the peak of its bubble. Despite their collapse, Irish home prices are still slightly above “fair” value—partly because they were incredibly overvalued at their peak, and partly because incomes and rents have fallen sharply. In contrast, homes in America, Japan and Germany are all significantly undervalued. In the late 1990s the average house price in Germany was twice that in France; now it is 20% cheaper.
What is it about the German economy that makes it so robust? Well, puzzle not, here comes the Wall Street Journal to tell us that Germany and France are not immune to debt problems either: