The Canada housing market is no longer in danger of overheating according to the latest quarterly Housing Market Assessment from Canada Mortgage and Housing Corporation (CMHC).
For the first time in 2.5 years, Canada Mortgage and Housing Corporation has rated the Canada housing market as only moderately vulnerable, indicating the hot conditions characterised by bidding wars and sky-high prices may be cooling off a little, partly due to tax measures introduced against overseas property investors.
In its quarterly Canada Housing Market Assessment, CMHC found that inflation-adjusted average price fell by 5.4 per cent in the fourth quarter of 2018 compared to the same period in 2017.
In its latest report, the Canadian Real Estate Association said the average price of a home sold in Canada during March was $481,745.
CMHC measures vulnerability to identify imbalances in the Canada housing market that could result in dramatic corrections where consumers lose money. The object is to provide the public with information they can use to try to avoid buying at the peak of a bubble, for instance.
Four times per year, the housing corporation rates 15 metropolitan areas in Canada on four measures:
For each area, it assigns a grade of high, moderate or low vulnerability.
High-demand markets in Vancouver, Victoria, Toronto and Hamilton continue to receive grades of high vulnerability overall. Notably, though, in Vancouver – Canada’s most expensive housing market – overvaluation eased from high to moderate and overheating from moderate to low.
In Toronto, while the housing corporation warns that overheating, price acceleration and overvaluation continue to be of some concern, overvaluation is continuing to ease. There’s little sign of overbuilding in the city, however, with Toronto receiving a score of low vulnerability on that front.
Patrick Perrier, deputy chief economist, said the report is good news for Canadians.
He said that after a long period of high vulnerability on all four markers, the Canada property market is ‘now showing signs of softening, so in fact that’s a good thing for the housing market.’