Housing Market Considered Vulnerable, As Overvaluation and Price Acceleration Factors Remain
The housing market across Canada, with the exception of Winnipeg and Saskatoon, remains highly vulnerable overall for the sixth consecutive quarter with evidence of overvaluation and price acceleration, according to Canada Mortgage and Housing Corporation.
Canada Mortgage and Housing Corporation issued its Housing Market Assessment (HMA) results, which are based on data as of the end of September 2017 and market intelligence as of the end of December 2017.
The report continues to find the housing market of Toronto, Hamilton, Vancouver and Victoria highly vulnerable due to price acceleration and overvaluation. There is low evidence of overbuilding overall at the national level but there are concerns surrounding overbuilding in Calgary, Edmonton, Saskatoon and Regina. The housing market in these parts of Canada show results that the inventory of new but unsold homes and rental vacancy rates remain high. Low vulnerability is detected for housing markets in Manitoba, Québec and the Atlantic.
- Overvaluation at the national level remains moderate, but strong evidence of overvaluation continues to be seen in Toronto, Vancouver, Hamilton, and Victoria.
- Despite the recent price adjustments, the ratings of high degrees of vulnerability were maintained in Toronto and Hamilton. House prices are not fully supported by economic fundamentals such as personal disposable income and population growth.
- Vancouver’s housing market remained highly vulnerable. Overheating continues to be detected, as demand for multi-family units remains elevated, largely due to their relative affordability compared to single-detached homes. Inventories of both new and resale multi-family units are near all-time lows.
- Victoria’s overvaluation persisted with low inventory levels of new and resale homes.
- House prices in Calgary, Edmonton, Saskatoon and Regina appear broadly in line with fundamentals, but strong evidence of overbuilding is still observable. Both inventories of completed and unsold homes and rental vacancy rates are above the thresholds of overbuilding.
- Housing markets for Manitoba, Québec and Atlantic Canada were rated as showing low vulnerability.
CMHC defines vulnerability as imbalances in the housing market. Imbalances occur when overbuilding, overvaluation, overheating and price acceleration – or combinations thereof – depart significantly from historical averages.
As Canada’s authority on housing, CMHC contributes to the stability of the housing market and financial system, provides support for Canadians in housing need, and offers objective housing market research and information to Canadian governments, consumers and the housing industry.
Click here to see the full housing market report.
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