The results of the CMHC study, which were released on July 27, painted a troubling picture of a national market that has seen 14 per cent price growth on a year-over-year basis due to increased demand, and is poised to experience even more gains in the near future, reported The Globe and Mail
In particular, the report pointed at the trend of price growth now observable in Hamilton, which is situated just beside the red-hot market of Toronto. Home sales volume in Hamilton has increased despite weaker immigration and job growth numbers.
“What we’re also detecting now is a spreading of those price pressures to neighbouring communities,” CMHC chief economist Bob Dugan said.
“Hamilton’s employment growth has been consistently slowing since the third quarter of 2014, while house prices have grown faster,” CMHC wrote in its report.
In nearby Toronto, the housing market has been bolstered by strong employment numbers and record-low mortgage rates, but a creeping problem remained despite this performance level.
“[However], the growth in house prices persistently outpaced economic and demographic fundamentals,” CMHC warned. Sales volume for homes in the above-$2-million range surged by 41 per cent in Q1 2016 alone.
The heat is spreading not just to other markets but to other housing types as well, the report stated.
“We have started to see … both townhomes and apartments also moving into overheated conditions, whereas before it was mostly on the single-family side,” CMHC Vancouver analyst Robyn Adamache said.
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In its latest report, the Canada Mortgage and Housing Corp. sounded the alarm on the housing euphoria’s gradual entry to other markets across the country, with “moderate evidence of problematic conditions” now found in the national housing segment as a whole.