Photo: Johannes Plenio/Unsplash

In a severe global housing downturn, Canada wouldn’t have it so bad.

Well, at least 10 developed nations would see their economies take a bigger hit, according to a new study from Oxford Economics.

The UK-headquartered economic researcher looks at “moderate” and “pessimistic” scenarios — the latter would amount to the second-worse worldwide housing collapse in about 40 years — and in either case Canada winds up in the middle of the pack.

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In the worst case Canadian GDP would be clipped by more than a full percent in 2021, compared to what Oxford Economics has otherwise forecast, while in the moderate scenario reduces projected growth by about half that.

This is roughly with what would play out in Austria and Belgium, and slightly more serious than the shockwaves sent through France and Switzerland.

Four economies would see less than 1 percent shaved off their respective GDPs even going off the pessimistic model: Spain, Portugal, Japan and the US.

“Importantly, large economies such as the US and Germany also look relatively low risk,” writes Oxford Economics Lead Economist Adam Slater, the study’s author.

Slater isn’t the first economist to note how Canada’s housing market is more risk-exposed than the US’s.

Eric Lascelles, chief economist for RBC Global Asset Management, recently noted how the two countries have swapped roles since the Great Recession.

While Canada emerged from this period relatively unscathed and experienced years of price gains, stateside challenges lingered.

While Canada may face more adversity than its neighbour to the south, it’s nowhere near what could befall Finland, the most deeply vulnerable of the 19 national markets presented in the study.

A pessimistic analysis estimates potential Finnish economic growth would be eroded by about 2 percent, double the impact on Canada.

The Oxford analysis is based on a number of elements, from home price changes and effects on household wealth to housing investment and consumer spending.

By one metric, Canada is indeed one of the most at risk.

“High house price valuations and strong recent housing investment are historically associated with risks of large housing downturns,” says Slater.

“On this basis, the economies currently most vulnerable appear to be Nordic countries, Canada, New Zealand, Australia and the UK,” he continues.

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