Canada Mortgage and Housing Corporation (CMHC) recently released results from its House Price Analysis and Assessment (HPAA) framework, which is meant to reveal problematic conditions in Canadian housing markets.
The report analyzed the national market, as well as 15 Census Metropolitan Areas (CMAs): Vancouver, Victoria, Calgary, Edmonton, Regina, Saskatoon, Winnipeg, Toronto, Hamilton, Ottawa, Montreal, Quebec, Moncton, St. John’s and Halifax.
The overall assessment of risk for Toronto, Winnipeg and Regina were detected as high. In Toronto, this is due to price acceleration and overvaluation. In Winnipeg, the high level of risk is due to overvaluation and overbuilding, and in Regina, it is due to price acceleration, overvaluation and overbuilding, especially in condo apartments.
“Nationally, CMHC continues to detect a modest risk of overvaluation. However, our overall assessment of the risk of problematic conditions varies from centre to centre due to regional differences in housing markets,” said Bob Dugan, CMHC Chief Economist, in a press release. “Imbalances in local housing markets could be resolved with further moderation in house prices or improving economic conditions.”
He continues, “In the case of Toronto, strong price acceleration in 2015 reflects a larger share of sales of pricier homes. The rise in house prices have not been matched by growth in personal disposable income, giving rise to a modest risk of overvaluation.”
In Montreal and Quebec, the risk of problematic market conditions has been deemed moderate, as some overvaluation may be occurring. In Toronto, Ottawa and Montreal, the CMHC is monitoring the risk of overbuilding as condominium units under construction near historical peaks. Inventory management will be used to ensure these units are sold when construction has been completed.
Vancouver’s overall housing market risk has been deemed low, as none of the individual risk factors have been detected. Also noted as low risk are Victoria, Hamilton and Moncton, which have all recently been added to this report.
This is the third release of the HPAA, with the next issue of the quarterly report due in October.
