The rapid bounce-back in housing activity was also supported by federal government initiatives, notably the Insured Mortgage Purchase Plan and the Home Renovation Tax Credit. As a result, the recovery in the housing market played an important role in ensuring that the recession in Canada, while sharp, was also short.
With this renewed vigour building on the decade-long boom that preceded the crisis, the average level of house prices nationally now stands at nearly four-and-a-half times average household disposable income. This compares with an average ratio of three-and-a-half over the past quarter-century (Chart 6). Simple house price-to-rent comparisons also suggest elevated valuations (Chart 7).