VICTORIA – Canada’s housing markets remain highly vulnerable overall for the sixth consecutive quarter, with overvaluation noted in Victoria and Vancouver, according to the Canada Mortgage and Housing Corporation (CMHC).
On a quarterly basis, CMHC issues its Housing Market Assessment (HMA) to provide Canadians with both expert and impartial insight and analysis, based on the best data available in Canada. This report acts as an “early warning system” for the country’s housing markets – an important tool supporting financial and housing market stability.
Results are based on data as of the end of September 2017 and market intelligence as of the end of December 2017.
CMHC’s HMA continues to find housing markets in Victoria, Vancouver, Toronto, and Hamilton highly vulnerable due to price acceleration and overvaluation.
There is low evidence of overbuilding overall at the national level but there are concerns surrounding overbuilding in Calgary, Edmonton, Saskatoon and Regina.
In these markets, the inventory of new but unsold homes and rental vacancy rates remain high. Low vulnerability is detected for housing markets in Manitoba, Québec and the Atlantic provinces.
Highlights of the report are:
- Overvaluation at the national level remains moderate, but strong evidence of overvaluation continues to be seen in Victoria, Vancouver, Hamilton, and Toronto.
- Despite the recent price adjustments, the ratings of high degrees of vulnerability were maintained in Toronto and Hamilton. House prices are not fully supported by economic fundamentals such as personal disposable income and population growth.
- Vancouver’s housing market remained highly vulnerable. Overheating continues to be detected, as demand for multi-family units remains elevated, largely due to their relative affordability compared to single-detached homes. Inventories of both new and resale multi-family units are near all-time lows.
- Victoria’s overvaluation persisted with low inventory levels of new and resale homes.
House prices in Calgary, Edmonton, Saskatoon and Regina appear broadly in line with fundamentals, but strong evidence of overbuilding is still observable. Both inventories of completed and unsold homes and rental vacancy rates are above the thresholds indicating overbuilding.
Manitoba, Québec and Atlantic Canada housing markets were rated as showing low vulnerability.
CMHC defines vulnerability as imbalances in the housing market. Imbalances occur when overbuilding, overvaluation, overheating and price acceleration – or combinations thereof – depart significantly from historical averages.
As Canada’s authority on housing, CMHC seeks to contribute to the stability of the housing market and financial system, provides support for Canadians in housing need, and offers objective housing research and information to Canadian governments, consumers, and the housing industry.