The Canadian housing market still has high levels of vulnerability according to the latest report from CMHC.
The agency says that, for the 6th consecutive quarter, there is evidence of overvaluation and price acceleration, despite improvement in some metros.
The Housing Market Assessment published Tuesday highlights the risk of overvaluation and price acceleration in Toronto, Hamilton, Vancouver and Victoria.
It also notes that overbuilding is a potential risk in Calgary, Edmonton, Saskatoon and Regina, where the inventory is low but there are still large numbers of unsold homes and high rental vacancy rates. Overbuilding is not an issue nationally.
For Toronto and Hamilton, CMHC says that there is not enough growth in disposable household income and population to fully support the rise in prices.
Vancouver is highly vulnerable due to the continued demand, especially for the ‘more affordable’ multi-family options.
“Our market assessment continues to show a high degree of vulnerability for the housing market at the overall national level because of the combination of price acceleration and overvaluation,” said Bob Duggan, CMHC’s chief economist. “Regional disparities remained, especially in terms of overvaluation, as some centres in BC and Ontario were still highly overvalued leading to an overall assessment of a high degree of vulnerability.”
Manitoba, Québec and Atlantic Canada housing markets were rated as showing low vulnerability.
More market update: