KEY RESULTS: CMHC’s First Quarter Housing Assessment of 2018
Canada’s housing market is showing persistent moderate to high ratings. Overall, the market is vulnerable due to overvaluation and overbuilding.
- Overvaluation at the national level remains moderate, but strong evidence of overvaluation continues to be seen in Toronto, Vancouver, Hamilton, and Victoria.
- 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 of overbuilding.
- Manitoba, Québec and Atlantic Canada housing markets were rated as showing low vulnerability.
We continue to see a high degree of vulnerability in Canada’s housing market, fuelled by moderate overvaluation and price acceleration. House price growth continues to outpace economic fundamentals like household income and population growth. In 2018 and into 2019, housing starts are projected to decline while house prices should increase, but at a slower rate than in the past four years.
CMHC’s HMA continues to find housing markets in Toronto, Hamilton, Vancouver and Victoria 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.- Canada Mortgage and Housing Corporation (CMHC).
(PDF)To read the full assessment: Canada Mortgage and Housing Corporation (CMHC).