CMHC worries over stability

Entire housing market seen as a concern

Canada Mortgage and Housing Corp. says prices are overvalued in 60 per cent of the top 15 cities it surveys across the country.

In its Housing Market Assessment Survey, released Wednesday, the Crown corporation said overall evidence of problematic conditions in the housing market for the country as a whole has been bumped up from weak to moderate — with Vancouver singled out for “very high” evidence of problematic conditions in its market.

“For Canada overall, we now detect strong evidence of overvaluation. As a result, our overall assessment has moved from weak to moderate since the last report. Moreover, recent trends in Vancouver have led us to conclude that there is now strong evidence of problematic conditions in our assessment of that market,” said Bob Dugan, chief economist for CMHC.

CMHC says the survey acts as an early warning system for Canadians and the real estate industry to address concerns about the market, which it says promotes stability. The agency defines evidence of problematic conditions as imbalances in the housing market. CMHC says those imbalances can occur when overbuilding, overvaluation, overheating and price acceleration, or combinations of those factors, move away from historical averages.

Overvaluation was found in nine markets and overbuilding was detected in seven. Overall, Vancouver has been added to cities with “problematic conditions;” CMHC says such conditions still exist in Toronto, Calgary, Saskatoon and Regina.

“In Toronto and Vancouver, this is due to the combination of price acceleration and overvaluation. In Calgary, Saskatoon and Regina, this is due to the combination of overvaluation and overbuilding,” CMHC said in a release.

This week the British Columbia government made a move to attempt to slow down its market by imposing a 15 per cent additional property tax on foreign investors buying in Metro Vancouver.