Modelling the macrofinancial effects of a house price correction in Canada

Thibaut Duprey, Xuezhi Liu, Cameron MacDonald, Maarten van Oordt, Sofia Priazhkina, Xiangjin Shen, Joshua Slive

Research output: Book / ReportReportProfessional


We use a suite of risk-assessment models to examine the possible impact of a hypothetical house price correction, centred in the Toronto and Vancouver areas. We also assume financial stress significantly amplifies the macroeconomic impact of the house price decline. The rates of arrears rise for households and businesses, which puts some pressure on banks. But the large banks remain resilient through the risk scenario, supported by their international diversification and their ability to replenish capital with retained earnings. As with any simulation exercise, the results are subject to significant uncertainty and depend on the specifics of the scenario being considered.
Original languageEnglish
Number of pages10
Publication statusPublished - 2018

Publication series

NameBank of Canada Staff Analytical Note
ISSN (Electronic)2369-9639


  • Financial stability
  • Housing
  • Financial institutions
  • Banks


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