There is evidence of housing overvaluation in several Canadian cities.

There is evidence of housing overvaluation in several Canadian cities.

Housing risk rated as strong

Canada’s national housing agency says there is “strong evidence of problematic conditions” in the housing market.  It defines the conditions as imbalances due to overbuilding, overvaluation, overheating and price acceleration or combinations of these factors.

The quarterly report from the Canada Mortgage and Housing Corporation cites strong evidence of overvaluation in the cities of Toronto, Vancouver, Hamilton and Victoria and moderate overvaluation at the overall national level.

A high demand for townhomes and apartments suggests Vancouver’s market may be overheating.
A high demand for townhomes and apartments suggests Vancouver’s market may be overheating.

Decrease in disposable income cited

A news release attributes the situation to slow growth in the young adult population along with a decrease in disposable income. It also notes a pickup in home price growth.

The report notes the evidence of overbuilding has increased from six centres to seven. The addition is attributed to Quebec’s high number of rental apartment starts outpacing demand.

While the city of Vancouver’s market had cooled somewhat due to the implementation of tax measures, it is now showing moderate evidence of overheating. There are multiple-offers put on houses and higher prices.

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