In this video we look at the "CANZ economies" (Canada, Australia, and New Zealand) and the implications of them all sharing a common problem of overvalued property markets and overleveraged households. The video walks through a couple of slides of a recent edition of the Weekly Macro Themes report. In the video we look at the extent of the overvaluation in the property markets and how widespread it is, and then see how household leverage has risen well beyond that seen in America prior to the subprime financial crisis. Importantly, we also talk through some of the key variables and leading + coincident indicators of stress that could help in gauging when a housing bubble burst might materialize. Finally we look at the prospect of contagion across the 3 economies, given the similarities they share - the conclusion being that simultaneous problems are more likely than pure contagion as such...
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