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These are stories Report on Business is following Wednesday, June 5, 2013.

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Where real estate stands
Canada's housing market is among the frothiest in the world, according to a new OECD reading that warns of possible trouble in the event of an interest rate or income shock.

To be clear, the Bank of Canada's benchmark interest rate isn't expected to even begin rising until late next year or early 2015, but the recent measure by the Organization for Economic Co-operation and Development is food for thought.

The OECD uses a combination of two measures to calculate how residential real estate prices are overvalued or undervalued.

By this reading, Canada ranks third, behind Belgium and Norway, and is followed by New Zealand and France.

On the other end of the scale, the most undervalued real estate is in Japan, Germany, South Korea, Ireland and Portugal.

The OECD looks at price-to-rent and price-to-income ratios, the first being a measure of the profitability of home ownership and the second one of affordability.

If they're above the average over the long-term, the OECD says, the real estate in question is overvalued.

Prices in the United States, Italy and Austria are "broadly correctly valued," according to the OECD.

In Germany and Switzerland, homes are undervalued but prices are on the rise. And in Australia and many parts of Europe, particularly Spain and Britain, homes are overvalued but prices are on the decline.

Then there's the last category, where real estate seems overvalued, but with prices still climbing.

"This is the case in Canada, Norway, New Zealand and, to a lesser extent, Sweden," the Paris-based agency says.

"Economies in this category are most vulnerable to the risk of a price correction – especially if borrowing costs were to rise or income growth were to slow."

While home sales have plunged across Canada over the past year, since Finance Minister Jim Flaherty brought in his latest mortgage restrictions to cool the market, prices have still generally held up.

Toronto and Vancouver are the two cities in focus in Canada's housing market, given what had been their frothy nature.

Today, The Globe and Mail's Tara Perkins reports, the Toronto Real Estate Board said sales in the area fell 3.4 per cent from a year earlier, but the MLS home price index showed a 2.8-per-cent gain.

And yesterday, as The Globe and Mail's Brent Jang writes, the Real Estate Board of Greater Vancouver reported numbers that showed the market picking up in May, with sales rising 1 per cent though prices still down by 4.3 per cent.

That's the first gain since September of 2011.

"However, before property owners can exhale, note that sales remain 19.4 per cent below their 10-year average for the month, courtesy of last year's 31-per-cent cliff dive," said senior economist Sal Guatieri of BMO Nesbitt Burns.

"Meantime, a hefty 18-per-cent year-over-year decline in new listings appears to have put a floor under prices."

Calgary is another matter entirely, with sales up almost 7 per cent in May.

Over all, Canada's residential real estate market appears to in soft-landing mode, and few observers expect otherwise.

"If the priciest market in Canada can muster a mere 5-per-cent price correction, should not the rest of the country (and in particular Toronto) have even less to worry about … barring, of course, a larger shock than tougher mortgage rules," Mr. Guatieri said, referring to the recent stability in Vancouver.

"Severe affordability issues in Vancouver's detached market still point to weaker prices in the year ahead, but a material correction is not in the cards unless interest rates spike higher or job losses mount because of a recession."

Also today, Statistics Canada reported that building permits issued across the country climbed 10.5 per cent in April from March, marking the fourth increase in a row.

That was largely on developers' plans for multi-unit construction, as in condos and apartments, in Ontario, British Columbia and Quebec.

IMF says it misjudged
The International Monetary Fund is setting a new tone in the debate over Europe's harsh austerity measures.

The Wall Street Journal says the IMF admits in a report what the news organization describes as major missteps in the massive bailout of Greece, the poster child of the euro crisis.

The document reportedly says the group underestimated the ravages of austerity measures in Greece, which is struggling with a protracted recession and crippling levels of unemployment.

But the report also says that this helped buy time for the rest of the euro zone.

Abe's reforms disappoint
Japan's Prime Minister Shinzo Abe launched the "third arrow" in his economic program today, one that disappointed markets.

Mr. Abe, whose so-called Abenomics is now in question, promised to boost incomes and establish economic zones, among other things, Reuters reports.

Tokyo's Nikkei, which has been on one heck of a roller coaster ride, plunged 3.8 per cent, closing in on bear market terrority.

"The catalyst for the weak session in Japan was a disappointing speech from Japanese PM Abe in which he was expected to lay out an agenda for labour market deregulation, tax reform, and the restarting of Japan's nuclear plants (his proverbial third policy 'arrow') – but instead introduced only smaller and more piecemeal reforms, failing to provide a date for the restarting of Japan's nuclear infrastructure, mainly avoiding the other two subjects, and promising more to come," said Derek Holt and Dov Zigler of Bank of Nova Scotia.

Oil companies optimistic
Canada's oil companies have taken a decidedly sunny view of their future, with a new forecast that substantially increases the number of barrels they expect to produce, The Globe and Mail's Nathan VanderKlippe reports.

The Canadian Association of Petroleum Producers today released its annual outlook, which shows a 500,000 barrel-per-day increase in estimated Canadian crude output for 2030, relative to expectations just one year ago.

The CAPP numbers are considered by many the foundation for assessing the future of the Canadian oil industry, and industry says the deluge of coming oil should be taken into account by governments and policy-makers, since it will require substantial new infrastructure, including pipelines, to move it around.

Penn West revamps
Penn West Petroleum Ltd. today unveiled an aggressive plan to cut costs and, possibly, shed assets, while slashing its dividend at the same time.

As The Globe and Mail's Bertrand Marotte reports, Penn West has struck a special committee to study "all alternatives to increase shareholder value," including financing options, dumping assets and striking joint ventures.

It also cut its quarterly dividend to 14 cents from 27 cents, and is replacing chief executive officer Murray Nunns with David Roberts, former chief operating officer of Marathon Oil Corp.

"Penn West has many high quality assets but the company has yet to unlock their complete value," said chairman Rick George.

Apple dips
Shares of Apple Inc. dipped today, though only just, in the wake of a trade victory by rival Samsung Electronics.

Yesterday, the U.S. International Trade Commission banned imports on some older iPhone and iPad models, among others, ruling that they breached a Samsung patent.

President Barack Obama can overturn that ruling, and Apple can appeal.

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