CANADA – Canada’s housing markets remain highly vulnerable with evidence of moderate overvaluation and price acceleration, according to Canada Mortgage and Housing Corporation (CMHC). After a boost in residential construction in 2017, housing starts are projected to decline by 2019, but to remain close to the average level from the last 5 years.
This analysis is from two key CMHC reports recently released: the Housing Market Assessment (HMA) and Housing Market Outlook (HMO).
CMHC’s HMA continues to find housing markets in Toronto, Hamilton, Vancouver, Victoria and Saskatoon highly vulnerable. There is low evidence of overbuilding overall at the national level but there are growing concerns surrounding overbuilding in Calgary, Edmonton and St. John’s. In these markets, the supply of new and unsold homes outweighs the demand for housing.
Housing Market Assessment (HMA) highlights:
- Vancouver’s housing market remained highly vulnerable, with evidence of moderate overheating and price acceleration, and strong overvaluation. Imbalances remained between demand and supply in the resale home market, especially for multi-family units.
- Victoria’s overheating persisted due to continued elevated sales for apartments and townhomes in the resale market, but very low inventories in the new home market of unsold homes to support the strong demand.
CMHC’s HMO provides a forward-looking analysis anticipating emerging trends in Canada’s new home, resale and rental housing markets. Variables covered include housing starts, MLS sales, and vacancy rates. Other economic factors considered in our analysis include economic and employment growth, migration, population and mortgage rates.
After the expected boost in residential construction for 2017, housing starts are projected to decline by 2019. Sales in the existing-homes market are expected to decline relative to the record level of more than 535,000 MLS sales registered in 2016.
The average MLS price should increase over the forecast horizon, but at a slower rate than in the past four years. The average should lie between $493,900 and $511,300 in 2017 and between $499,400 and $524, 500 by 2019.
Housing Market Outlook (HMO) regional highlights
- British Columbia: Housing starts and MLS sales in B.C. are expected to decrease in 2018 and 2019, but will remain above historical levels, while MLS prices will continue to grow at a slower pace as the housing market moves towards more balanced conditions. Rental demand will continue to be strong through the forecast period, with vacancy rates remaining tight and average rents rising.