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CMHC Releases Updated Results of its House Price Analysis

Posted on February 2, 2018 by Jivan Sanghera

Canada Mortgage and Housing Corporation (CMHC) released updated results today from its House Price Analysis and Assessment (HPAA) framework, which is designed to detect the presence of problematic conditions in Canadian housing markets.
“Modest overvaluation based on national indicators reflects a variety of price conditions across the country with some centres showing more signs of overvaluation than others. Likewise, housing market risk factors such as overheating, acceleration in house prices and overbuilding also vary by CMA” said Bob Dugan, CMHC’s Chief Economist.
Toronto, Montréal, and Québec
In our model these CMAs continue to indicate risks that exceed those at the national level, but remain moderate nonetheless. This largely reflects the detection of some risk of overvaluation in these centres, with an added note of caution for Toronto and Montréal related to the risk of overbuilding. Condominium units under construction are near historical peaks. Inventory management is necessary to make sure that these condominium units under construction do not remain unsold upon completion.
Regina and Winnipeg
In these CMAs, the risk of problematic market conditions evident in our model is high. In Regina, this reflects price acceleration, overvaluation and overbuilding, particularly of condominium apartments. In Winnipeg, risk of overvaluation and overbuilding are detected.
Calgary and Edmonton
These CMAs are currently assessed as low overall risk, despite a risk of overvaluation in Calgary. However, MLS® sales have declined in recent months in these CMAs, pushing the sales-to-new listings ratio to buyers’ market levels, reflecting the impact of lower oil prices on housing demand in these oil-producing centres. This is expected to place downward pressure on house price growth, which could lessen the current risk of overvaluation in Calgary.
Low overall housing market risk is observed for Vancouver, as none of the individual risk factors are currently detected.
The HPAA is a comprehensive framework that is designed to assess housing market conditions by taking into consideration the economic, financial and demographic drivers of housing markets. The use of multiple indicators of housing conditions, which incorporate various data sources and prices measures, provides a robust picture of overall housing market conditions. The results released today include those for the national market as well as 12 CMAs – Vancouver, Calgary, Edmonton, Regina, Saskatoon, Winnipeg, Toronto, Ottawa, Montréal, Québec, St.John’s and Halifax.

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