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Canada housing agency sees overvaluation in most cities

Published 2015-10-29, 12:29 p/m
Canada housing agency sees overvaluation in most cities

TORONTO, Oct 29 (Reuters) - Canada's housing market is
overvalued in most major cities, with price acceleration not
supported by economic and demographic fundamentals in Toronto,
the largest market, the federal housing agency said on Thursday.
In a report that highlights the nation's uneven real estate
market, The Canada Mortgage and Housing Corp said there is
strong evidence of overvaluation in Toronto, Montreal and Quebec
City, and moderate risk in most other cities, while overbuilding
is most problematic in Winnipeg, Saskatoon, Regina, and Moncton.
When four factors were considered - overheating, price
acceleration, overvaluation and overbuilding - Toronto,
Winnipeg, Regina and Saskatoon showed the strongest risk of
problematic conditions, the report concluded.
"The most prevalent issue detected in 11 of the 15 centres
covered by the HMA is overvaluation," Bob Dugan, CMHC's chief
economist, said in the agency's quarterly Housing Market
Assessment (HMA).
"The continued rise in house prices (in Toronto) has not
been matched by growth in economic and demographic fundamentals
giving rise to strong evidence of overvaluation," the report
noted.
Canada's housing market has been in a prolonged boom since
2009 and economists have repeatedly warned that the sector is at
risk of a correction, though they disagree over whether the
market will manage a soft-landing or will crash.
While slow economic growth and a drop in oil prices have
cooled some markets, low interest rates have continued to
support demand, particularly in Toronto and Vancouver, the
nation's two largest markets.
The report, however, said there was little evidence of
problematic conditions in Vancouver or Victoria.

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