Canada’s housing market continued its tumultuous decline with its seventh straight quarter. The country’s largest metros, the Greater Toronto Area and Great Vancouver, were the most vulnerable markets due to serious market imbalances. Victoria and Hamilton remained “highly vulnerable” as well, according to the Canada Mortgage and Housing Corp.
Although some markets are facing a lower degree of risk, Canada’s overall housing market is still considered high-risk. Overvaluation is rampant in Greater Vancouver, and price acceleration is common in most markets across the country.
- Canada’s overall housing market is “highly vulnerable” to market imbalances like overvaluation and price acceleration
- Toronto, Vancouver, Victoria, and Hamilton are the most vulnerable and imbalanced markets
- Tight markets conditions for low-cost properties continue to push prices higher in markets like Vancouver and Toronto
In the final quarter of 2017, the two markets, along with Victoria and Hamilton, remained “highly vulnerable”, according to the Canada Mortgage and Housing Corporation’s (CMHC) latest Housing Market Assessment, published Thursday. With these markets in the danger zone, Canada’s housing market continues to have a high degree of vulnerability to market imbalances.
“Regionally, there’s a fair amount of variation, as we continue to see a high degree of vulnerability in major centres in Ontario and British Columbia while Prairie and Atlantic markets range from moderate to low,” says Bob Dugan, CMHC chief economist, in a statement.
At the national level, home prices remain elevated relative to values supported by fundamental factors, including income and population. In addition, moderate evidence of price acceleration continues to be detected in the overall market.
Although Greater Vancouver, the GTA, Victoria and Hamilton maintained a high degree of vulnerability, each market scored different ratings when broken down by vulnerabilities.
Greater Vancouver continued to experience high evidence of overvaluation, as fundamental supply and demand factors could not account for current price levels. For the eighth consecutive quarter, moderate evidence of price acceleration was detected, which was originally seen in the second quarter of 2016.
“Tight market conditions for lower-priced properties continue to exert upward pressure on the prices of these homes, accentuating CMHC’s detection of overvaluation in the Metro Vancouver housing market,” says Eric Bond, CMHC principal, market analysis, in a statement.
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