Metro Vancouver鈥檚 housing market has been assessed as 鈥渉ighly vulnerable鈥� for the eighth consecutive quarter by the Canada Mortgage and Housing Corporation (CMHC).
In its latest , which was released April 26 but assesses activity in 2017鈥檚 fourth quarter, CMHC said it 鈥渄etected a high degree of vulnerability鈥� in Metro Vancouver鈥檚 market, driven by overvaluation, price acceleration and overheating.
The report said, 鈥淭ight market conditions, reflected in our detection of moderate overheating, particularly for lower-priced properties, continue to exert upward pressure on the prices of homes. This can create affordability challenges for households with average local incomes. Rising prices for homes in the sub-$1 million market segment, coupled with rising mortgage rates, have eroded overall affordability further, accentuating CMHC鈥檚 valuation models鈥� detection of overvaluation in the Metro 麻豆传媒映画housing market.鈥�
It added, 鈥淒emand and supply fundamental factors such as population, income, financing costs and land supply cannot account for the current price levels.鈥�
The quarterly Housing Market Analysis analyzes real estate markets across Canada, assessing a combination of four key risk factors: overheating, when demand for homes in the region outpaces supply; sustained acceleration in house prices; overvaluation of house prices in comparison with levels that can be supported by economic fundamentals; and overbuilding, when the inventory of available homes exceeds demand.
The only area where the risk was seen as low in Metro 麻豆传媒映画was overbuilding. 鈥淒espite record-breaking new home construction over the past two years, new home inventories remain low as developers have not been able to keep up with the demand,鈥� said the report.
Eric Bond, report author and principal of market analysis at CMHC, observed that Metro Vancouver鈥檚 market varies considerably depending on property type. He wrote, 鈥淭he majority of the sales-to-available[-listings] ratios for townhouses and apartments remained well within sellers鈥� territory, as high demand continued to exist for these home types due to their relative affordability in comparison to single-detached homes. In the past two years it has become clearer that the difference in market conditions between property types and locations is primarily determined by affordability.鈥�
National picture
Despite Canada as a whole being assessed as at 鈥渕oderate risk鈥� in price acceleration and overvaluation, and at 鈥渓ow risk鈥� in overheating and overbuilding, the CMHC at 鈥渉igh risk鈥� overall, for the seventh straight quarter. The report said that it was the 鈥減ersistence鈥� and combination of price acceleration and overvaluation that led to this assessment.
Victoria Census Metropolitan Area (CMA) was also assessed as at high risk overall, with the same ratings in each of the four factors as Metro Vancouver.
Alberta and the Priarie cities were assessed as at moderate risk, with Winnipeg the exception at low risk. Toronto and Hamilton CMAs were both assessed as at high risk, their patterns almost identical to those of 麻豆传媒映画and Victoria CMAs. Low risk of market correction was assessed in all the other cities, including Halifax, Qu茅bec and Montr茅al 鈥� with the caveat that the CMHC will increase Montr茅al鈥檚 risk assessment next quarter if prices continue to rise.
