Canadian housing market still “highly vulnerable” says CMHC
Overvaluation and price acceleration in four markets is leaving Canada?s overall housing market vulnerable
Steve Randall
REP
Overvaluation and price acceleration in four markets in particular is leaving Canada’s overall housing market vulnerable.
That’s the warning from the CMHC which has issued its Housing Market Assessment based on data from the first quarter and market intelligence from the second quarter of 2018.
The housing market’s “early warning system” flags that Toronto, Vancouver, Victoria, and Hamilton, are the markets CMHC is most concerned about.
“At the national level a high degree of vulnerability continues due to moderate levels of price acceleration and overvaluation. Regionally, we are seeing a fair amount of differences, for instance in major centres in Ontario and British Columbia a high degree of vulnerability remains while in the Prairie and Atlantic markets range from moderate to low,” said chief economist Bob Duggan.
The report’s main highlights Vancouver – moderate evidence of overheating although there has been moderation over the last two quarters. Declining prices for detached properties in some areas, particularly Vancouver’s Westside and West Vancouver, are due to high inventories that have accumulated due to sustained falling sales volumes.
Toronto – although price growth has slowed, CMHC says it would have to see longer-term lower prices to discount potential price acceleration.
Calgary – evidence of overbuilding but oversupply of condos has eased since the end of 2017.
Winnipeg – evidence of overvaluation increased in Q1 2018. Real disposable income levels have declined while mortgage rates have increased.
Hamilton – moderate overvaluation evidence despite decline on average. Prices still higher than some market fundamentals can support.
“Policy changes to the housing market over the past 12 months have dampened home buying demand and softened price growth. However, our assessment continues to indicate a high degree of vulnerability in the Toronto CMA housing market as price growth persists above rates justified by economic and demographic fundamentals such as income and population,” said Dana Senagama, Manager, Market Analysis, Ontario.
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