Canadian Household Debt Now Highest Among G7 Countries (Free ESL Lesson)

Lesson made on May 24, 2023

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Reading Lesson:

Canadians owe more money than any other group of people in the G7 countries, says the Canada Mortgage and Housing Corporation. G7 means Group of Seven, and also includes France, Germany, Italy, Japan, the UK and the USA. A big reason why Canadians owe so much is because house prices are really high.

In the last 10 years, people in the US and the UK have been able to reduce the money they owe, but not Canadians. If a big financial crisis were to happen, the housing agency says Canadians would be in a lot of trouble because they owe so much money.

Most of the money Canadians owe comes from home loans. When the price of houses increases, Canadians have more debt. An important economist says that if more people want to buy houses, Canada needs to make it more affordable to do so.

Right now, the average price of a home in Canada is really high, especially in cities like Toronto and Vancouver. They are among the top 10 most expensive cities in the world to buy a house. The price of houses in Canada has more than doubled since 2011.

The Canadian government is trying to make housing more affordable. They've even stopped foreigners from buying homes in Canada for two years. Some people think the government should also increase the number of houses, as more and more people are moving to Canada.

Comprehension Questions:

Speaking and Writing Activities:

- Discuss these questions with a partner or a small group.
- Choose one topic and write a response to it. Show your writing to a classmate or teacher.

1. Have you ever been to Toronto or Vancouver? Describe what it’s like. Why do you think housing pries are so high in these cities.

2. Do you think a restriction on foreign home buyers is fair? Do you think it will make housing more affordable?

3. What similarities or differences are there between the housing situations in your home country and Canada?

More Reading Practice:

What is the G7?

The G7, or Group of Seven, is like a club of seven very powerful countries. These countries are Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States. These seven countries have some of the biggest economies in the world. This means they make and spend a lot of money on things like food, cars, houses, and so on.

The leaders of these seven countries meet together once a year. This meeting is often called a "summit." At the summit, they talk about important things that are happening in the world. They discuss problems and try to come up with solutions together.

It's important to remember that the G7 is not a world government. It cannot make laws or tell other countries what to do. However, because the G7 countries are so powerful, their ideas and decisions can have a big effect on the world.

Why are houses so expensive in Canada?

There are many factors affecting the high price of houses in Canada.

One of these factors is demand and supply. This is an economic concept. If many people want to buy houses, but there aren't enough houses for sale, the price of the houses will go up.

Another factor is the cost of building houses. The prices of materials needed to build houses have increased. Therefore, the builders have to charge more to sell the houses they build.

Location also plays a role. Houses in larger cities such as Toronto or Vancouver are more expensive because many people want to live in these cities. They offer lots of jobs and opportunities, so people are willing to pay more to live there.

Another factor is the low interest rates. Interest is the money you pay to the bank when you borrow money. If the interest rates are low, people can borrow more money from the bank. That means they have more money to buy a house, which can make house prices go up.

What was the 2008 financial crisis?

The 2008 financial crisis was a serious worldwide economic crisis. It began in the United States, but it quickly spread to other parts of the world.

In the years before 2008, banks in the United States gave many loans to people who wanted to buy houses. This is called a mortgage. But there was a problem. Many people who got these loans did not have enough money to pay them back. Banks didn't check carefully if people could afford to pay back the loans. They thought that house prices would keep going up. If people couldn't pay, the bank could sell the house and still get their money back.

But then, something unexpected happened. House prices started to fall. Suddenly, many people had loans that were bigger than the value of their house. Many of these people stopped paying their loans.

Banks lost a lot of money because of this. Some banks even had to close. The crisis in the banks spread to the rest of the economy. Businesses couldn't get the money they needed. Many of them had to close or fire their workers. This made the crisis even worse.

The 2008 financial crisis was a very difficult time. It caused a lot of hardship for many people around the world. It taught us about the dangers of risky lending and the importance of careful money management.

Helpful Links:

Government of Canada: Canada and the G7

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