There is “weak evidence of problematic conditions” in Vancouver’s housing market, according to the latest quarterly report by the Canada Mortgage and Housing Corporation (CMHC) issued October 29.
The corporation’s October Housing Now report, which is an update of August's edition, said that Vancouver, Victoria and Canada as a whole are not suffering from overbuilding, overheating of demand or acceleration in house price growth – although there is increased concern about overvaluation in 11 out of Canada's 15 key housing markets.
Every quarter, the CMHC examines real estate in 15 major metropolitan centres and identifies four high-risk indicators:
- overheating of demand in the housing market (demand significantly outpacing supply);
- acceleration in the growth rate of house prices;
- overvaluation in the level of house prices; and,
- overbuilding of the housing market (supply significantly outpacing demand, which can reflect excess new construction and/or a decline in demand for existing homes).
The report found Vancouver at low risk – unchanged from the previous report – of overheating, price growth acceleration and overbuilding.
The report said, “The indicator for overheating of demand is below its threshold in the second quarter, despite resale market conditions favouring sellers.”
However it said that it now detected a “moderate” risk of overvaluation in Vancouver real estate, considering that prices had increased since the previous quarter with no corresponding increases in economic conditions.
Victoria was found to be at low risk in all four indicators.
This compares with Toronto, Winnipeg, Saskatoon and Regina, which were all found to be displaying “strong evidence of problematic conditions.”
Of Toronto, the report said, “Inventories of both new and existing single-detached homes have been declining, which has contributed to rapid price growth in this segment. The continued rise in house prices has not been matched by growth in economic and demographic fundamentals, giving rise to strong evidence of overvaluation.”
Bob Dugan, CMHC’s chief economist, added, “Problematic overvaluation conditions in local housing markets could be resolved by moderation in house prices and/or improving economic conditions.”