A new report released by the Canada Mortgage and Housing Corporation (CMHC) reveals that nine out of Canada’s 15 largest housing markets are showing signs of being overvalued.
According to the latest Housing Market Assessment, property prices are strongly overvalued in Vancouver, Saskatoon, Toronto and Quebec, and moderately overvalued in Edmonton, Calgary, Regina, Hamilton and Montreal.
What’s more, strong evidence of problematic conditions in housing markets overall are being seen in Toronto, Calgary, Saskatoon and Regina. In Toronto, this is due to the combination of price acceleration and overvaluation, while in Calgary, Saskatoon and Regina, this is due to the combination of overvaluation and overbuilding.
CMHC defines evidence of problematic conditions as imbalances in the housing market. Imbalances occur when overbuilding, overvaluation, overheating and price acceleration, or combinations thereof depart significantly from historical averages.
“While we see weak evidence of problematic conditions overall nationally, we do detect moderate evidence of overvaluation, meaning house prices remain higher than the level personal disposable income, population growth and other fundamentals would support,” said Bob Dugan, Chief Economist, Canada Mortgage and Housing Corporation.
Data released last week by the Canadian Real Estate Association showed that Canada’s housing market set a record last month both in terms of prices — now up to $508,567 nationally, on average – and the volume of sales.
Article by David Fuller