CMHC: Housing market is no longer “highly” vulnerable

Canada’s housing market has been rated as “highly vulnerable” for 10 consecutive quarters but the risk is easing.

The latest quarterly assessment from the CMHC says improved conditions – mostly easing price acceleration - have reduced the vulnerability to moderate.

“Even though moderate evidence of overvaluation continues for Canada as a whole, there has been improved alignment overall between house prices and housing market fundamentals in 2018 in comparison to the previous year,” said Bob Dugan, Chief Economist, Canada Mortgage and Housing Corporation.

Regional risk varies
But while the national picture appears rosier, some local markets still pose a risk.

Vancouver, Victoria, Toronto, and Hamilton are still considered highly vulnerable even as prices ease back to levels that CMHC believes can be supported by housing market fundamentals including population, personal disposable income and interest rates.

Vancouver’s evidence of overvaluation has reduced from high to moderate and evidence of overheating is also lower. Toronto’s overvaluation evidence is also now moderate rather than high.

There is evidence of a moderate degree of vulnerability in Edmonton, Calgary, Saskatoon, Regina and Winnipeg, mainly due to continued evidence of overbuilding.

Montreal and Moncton are showing evidence of overheating as the markets tighten.

Ottawa, Montréal, Québec City, Moncton, Halifax and St. John’s all have low degrees of vulnerability.

The report is based on data as of the end of December 2018 and market intelligence up to the end of March 2019.

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