According to the Housing Market Assessment (HMA) from Canada Mortgage and Housing Corporation (CMHC), which looks into evidence of problematic housing market conditions in 15 Census Metropolitan Areas (CMAs), there is strong evidence of problematic conditions in Toronto, Winnipeg, Saskatoon and Regina.
In Toronto, price acceleration and overvaluation are combining to provide evidence of problematic housing conditions, while Winnipeg, Saskatoon and Regina are at risk of overvaluation and overbuilding.
“The most prevalent issue detected in 11 of the 15 centres covered by the HMA is overvaluation. The evidence of overvaluation has increased since the previous assessment in Toronto, Vancouver, Montreal, Edmonton and Saskatoon, as price levels are not fully supported by economic and demographic factors,” said Bob Dugan, chief economist at CMHC, in a press release. “Problematic overvaluation conditions in local housing markets could be resolved by moderation in house prices and/or improving economic conditions.”
Montreal and Ottawa are showing signs of overvaluation and rising concerns of overbuilding, leading to moderate evidence of problematic market conditions, while Quebec is showing signs of overvaluation.
In Toronto, Montreal and Ottawa, overbuilding may become an issue soon. The number of condominium units under construction is elevated. CMHC believes that inventory management is crucial to ensure these new condo units are sold after completion.
The HMA indicates there is weak evidence of overall problematic conditions in Vancouver, although the region is showing moderate evidence of overvaluation, but this market is not currently showing signs of overheating, acceleration in house prices and overbuilding.
The next Housing Market Assessment report will be released in the first quarter of 2016.