Despite having the most expensive average home prices in the nation, the Metro Vancouver housing market is at “low risk” of being overvalued, according to the Canada Mortgage and Housing Corporation (CMHC).
In its House Price Analysis and Assessment (HPAA) released November 24, the CMHC observed a “modest” amount of overvaluation in the national housing market.
Using data culled from the Canada Real Estate Association, the CMHC calculated Metro Vancouver had price growth of 6.3% from January to September 2014, while average prices were at $812,000.
“The level of home prices in Vancouver is supported by local growth in personal disposable income and long-term population growth,” the HPAA said.
But the HPAA determined Toronto, which experienced 8.1% growth during that same period while average prices there were at $564,000, was at a moderate risk of overvaluation “due to steady price growth that has not quite been matched by growth in personal disposable income.”
The HPAA also examined the census metropolitan areas (CMA) of Calgary, Edmonton, Ottawa, Montreal, Quebec City and Halifax.
It found Montreal and Quebec City — where average home prices are at $324,000 and $264,000, respectively — were the only other regions at moderate risk of overvaluation due to the slower growth in the pool of first-time buyers.
“Across the (eight) CMAs examined, there is no overheating or acceleration," CHMS chief economist Bob Dugan said in a statement.
"There is however a cautionary note with respect to overbuilding in Toronto and Montreal. The number of units under construction is elevated in these centres. This could develop into overbuilding if these units are completed but not sold.”
