The performance of the housing market has widespread implications for the Canadian economy. An increase in housing costs means less disposable income for consumers to spend. Slowing mortgage growth and rising defaults present a potential earnings headwind for the banks, which comprise 20% of the Canadian stock market. And declining affordability makes it tougher for workers and businesses to operate in Canada’s big cities.

Most Canadians are likely focused on the value of their family homes. The chart attached maps the performance of the Canadian housing market back to 2005. As can be seen, house prices have delivered gains similar to those of Canadian equities. But they have delivered those gains with lower volatility. That can largely be chalked up to the complexities and time involved in buying/selling real estate and lower visibility on price.

There are many differences when comparing an investment in a home to a Canadian equity fund. Not least of which is the fact that you can live in your housing investment. However, from a pure investment perspective, this chart is a good reminder that you don’t need to buy property to achieve your financial goals. With expert advice and a diversified investment portfolio, you can make good progress.

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