Canada’s housing market remains a large risk for the seventh consecutive quarter according to the latest report from the CMHC.
Its Housing Market Assessment for the three months to the end of March 2018 highlights evidence of overvaluation and price acceleration, especially in Toronto, Vancouver, Victoria, and Hamilton.
"Our market assessment continues to show a high degree of vulnerability at the overall national level due to moderate levels of price acceleration and overvaluation existing together” warns chief economist Bob Duggan. “Regionally, there's a fair amount of variation, as we continue to see a high degree of vulnerability in major centres in Ontario and British Columbia while Prairie and Atlantic markets range from moderate to low."
The report highlights
Toronto has seen price declines for single-family homes, but the condo market has seen stronger gains. Inventory for all home types remains tight and there is low evidence of overbuilding.
Vancouver has seen overall affordability weaken amid rising prices in the sub-$1m market, coupled with increasing mortgage costs. CMHC says the city’s housing market is highly vulnerable.
Victoria has little evidence of overbuilding despite an upward trend of completed and unsold units. Prices are higher than local incomes in many cases though, providing strong evidence of overvaluation.
Montreal has low vulnerability although CMHC says price growth is picking up.
Calgary, Edmonton, Saskatoon and Regina are all showing signs of overbuilding, with high levels of new and unsold homes and high rental vacancy rates.
Winnipeg and Atlantic Canada show low vulnerability.
"We continue to see a high degree of vulnerability in the Hamilton housing market due to price acceleration and overvaluation. It's important to note, however, that overvaluation is easing as house prices are moving further into line disposable incomes, population growth and employment," commented Anthony Passarelli, Senior Analyst, Hamilton.