Vito Pilieci, Ottawa Citizen
Canada Housing and Mortgage Corp. says housing in this country is not as overvalued as some industry analysts have been claiming — and that Ottawa’s market is considered stable or low risk.
On Thursday, CMHC released an estimate that Canadian housing may be overvalued by as much as three or four per cent.
The estimate was part of its House Price Analysis and Assessment Framework, a report previously been used internally by CMHC analysts. The report, which federal housing watchdog says it now plans to release twice a year, is designed to help it detect and determine problematic conditions in Canadian housing markets.
CMHC monitors various factors, including housing demand, the increase in housing prices on an annual basis, speculation and its impact on values, and the housing construction within the city and whether overbuilding is taking place.
Based on its analysis, CMHC said, Regina and Winnipeg are the two markets that are likely to fall hardest should the housing market face rough times. Calgary, Edmonton, Ottawa and Vancouver are rated stable or low risk, and markets including Toronto, Montreal and Quebec City are classified as having a moderate risk of a housing market correction.
CMHC’s analysis for the month of March shows that the average home in Ottawa sold for $361,572, a marginal increase of 0.7 per cent compared with the same month last year.
The latest report from industry analyst PMA Brethour Realty Group, meanwhile, shows new-home sales for the month rose 4.4 per cent over March 2014 to 365 units, up 21.9 per cent from February, a time when the weather was frigid, conditions that usually see home sales slow significantly.
Resale home sales saw a modest two per cent increase to 1,208 over March 2014.
CMHC’s analysis and framework report comes on the heels of repeated warnings that Canadians are in midst of a housing market bubble. In December, Royal Bank of Canada chief executive David McKay made headlines when he suggested a market correction of 10 to 15 per cent this year was feasible.
Earlier in 2014, TD Bank said homes were about 10 per cent overvalued.
Last month, The Economist magazine reported that Canada’s housing prices were 35 per cent overvalued when compared with Canadian incomes.
