09/16/2016 07:53 EDT

Canadian Real Estate Isn't That Expensive Thanks To The Loonie: Bank Of America

Or Chinese.

You can buy a Canadian home for less now than you could at any time between 2010 and 2014.

If you're American. Or Chinese.

The company logo of the Bank of America and Merrill Lynch is displayed at its office in Hong Kong on March 8, 2013. (Photo: Bobby Yip/Reuters)

That's according to Bank of America Merrill Lynch Global Research, which has begun focusing on the Great White North's mortgage finance system as its real estate makes global headlines.

The bank's conclusion may be tough for Canucks to hear, especially after the national average sale price climbed 5.4 per cent in August from a year prior, the Canadian Real Estate Association (CREA) reported this week.

But look at the issue through a foreign currency lens and it actually makes sense.

"Homes are cheaper on both a U.S. dollar adjusted and Chinese renminbi basis than in 2010-2014," the bank said in a note released on Tuesday.

"Despite the high rates of home price appreciation, the continued appeal of Canadian real estate is reflected when adjusting home prices for the substantially weaker Canadian dollar."

A home for sale in Vancouver. (Photo: CP)

Canadian home prices are largely being propped up by housing activity in Toronto and Vancouver, the bank added.

Without those cities, home prices actually declined.

Certain parts of the country are overheating, but the conditions "fall short of a bubble," it said. Canadian real estate also presents a "stark contrast" with conditions in the U.S. housing market prior to the 2008 crash.

"Sales volume, controlled for population size, is well under that of the U.S. peak," the report said.

A "For Sale" sign in Toronto. (Photo: Mark Blinch/Reuters)

Bank of America blamed home price gains in Canada on a number of factors, such as "low borrowing prices [that] have supported prices" and "higher appeal to foreigners with a weakening Canadian dollar."

The latter trend has "distorted price gains," the bank said.

Their conclusion is consistent with a recent one by Bank of Montreal (BMO), which compared credit against home price gains and concluded that foreign buyers are indeed driving up home values.

But it's inconsistent with research by U.K.-based firm Capital Economics, which has concluded that the run-up in prices has more to do with debt than foreign investment.

"Homes are cheaper on both a U.S. dollar adjusted and Chinese renminbi basis than in 2010-2014."

Of course, affording a Canadian home is one thing. Going ahead and buying one is another one entirely.

It's a particularly tricky business in British Columbia, where the provincial government has slapped a 15 per cent property transfer tax on foreign buyers in response to feverish sales activity.

That may prove a stumbling block to anyone who wants to buy property in Vancouver. But the loonie could yet bring more happy news for international investors.

The Canadian dollar has been slumping for four months, and analysts say it could worsen as the country's exports undermine expectations, Bloomberg reported.

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