[OTTAWA] The housing markets of many of Canada's major cities show signs of being overvalued, including in Toronto and Vancouver, where prices have continued to climb, the country's federal housing agency said on Wednesday.
Canada's housing market has seen strong growth in the years since the financial crisis, supported in part by low interest rates. But in the past year, the market has fragmented, with resource-sensitive regions slowing, the major cities of Vancouver and Toronto accelerating and much of the rest of the country plodding along.
In Vancouver, one of the hottest markets, there is strong evidence of overvaluation as inventories of new and existing homes have been declining as demand has remained strong, the Canadian Mortgage and Housing Corporation (CMHC) said in its quarterly report.
On the whole, CMHC deemed the west coast city had moderate evidence of problematic conditions in its housing market.
Toronto, however, continued to show strong evidence of problematic conditions as continuing price increases have not been matched by growth in disposable income.
There were also signs of overvaluation in the oil-oriented cities of Calgary and Edmonton as the economies there have slowed and the inventory of available homes has increased.
Of the 15 major cities covered by the report, nine showed signs of overvaluation while seven showed evidence of overbuilding.
Although there were signs of moderate overvaluation in Canada overall, overheating is not a concern at this time, CMHC said.