In its latest study, the Canada Mortgage and Housing Corp. reported that the nation’s housing markets remain “highly vulnerable” with evidence of moderate overvaluation and price acceleration.
The Toronto, Hamilton, Vancouver, Victoria, and Saskatoon markets are also highly vulnerable, the national housing agency said in its quarterly housing market assessment released late last week.
The study gauged the overall level of risk by evaluating four problematic conditions: overheating, price acceleration, overvaluation, and overbuilding.
“For Canada, the housing market remains at a high degree of vulnerability,” CMHC chief economist Bob Dugan stated, as quoted by The Canadian Press.
The assessment came after the Canadian Real Estate Association’s latest figures showed that the number of homes sold in September climbed for the second month in a row.
Earlier this year, home sales across the country entered a period of considerable slowdown, with Toronto being a main driver of the trend after the Ontario government introduced measures aimed at cooling the market. Sales in September were down almost 12% from the record set in March before Ontario announced its housing plan.
CMHC noted that despite the recent easing in Toronto’s resale market, it detected moderate evidence of price acceleration with strong growth in home prices among all housing types.
Meanwhile, Vancouver’s housing market remained highly vulnerable, with evidence of moderate overheating and price acceleration, and strong overvaluation. Calgary and Edmonton also saw stronger overvaluation due to rising inventory of complete and unsold homes, with vacancy rates in both cities having pointed to overbuilding for several quarters.
In its housing market outlook which was also released late last week, CMHC said that after a boost this year, housing starts are expected to decline by 2019, but will remain close to the average level from the last five years.
Sales in the existing-homes market are also expected to decline relative to the record level set in 2016, while price growth is expected to slow.
“High house prices particularly for single-family homes and rising mortgage rates will bring about some cooling in the pace of housing market activity,” Dugan said.
Home ownership declining among Canadians – census
Western Canadian commercial real estate trends