February 23, 2012 Medium-Term Fluctuations in Canadian House Prices Bank of Canada Review - Winter 2011-2012 Brian Peterson, Yi Zheng This article draws on theory and empirical evidence to examine a number of factors behind movements in Canadian house prices. It begins with an overview of the movements in house prices in Canada, using regional data to highlight factors that influence prices over the long run. It then turns to the central theme, that there are medium-run movements in prices not accounted for by long-run factors. Drawing on recent Bank of Canada research, the article discusses several factors behind these medium-run movements, including interest rates, expected price appreciation and market liquidity. The article concludes by identifying areas for future research that would further our understanding of fluctuations in house prices. Content Type(s): Publications, Bank of Canada Review articles Topic(s): Asset pricing, Econometric and statistical methods, Market structure and pricing JEL Code(s): R, R2, R21, R3, R31