CMHC says Vancouver market no longer ‘highly vulnerable’ as price acceleration eases

Canadian Real Estate Association projects that the national average price will drop 0.6 per cent

The Canada Mortgage and Housing Corp. has lowered the vulnerability rating of Vancouver’s housing market to ”moderate,” marking the first change in three years as prices have eased.

The federal agency says in a report that “evidence of price acceleration” in Vancouver has eased to low, prompting a downrating after 12 consecutive quarters of being flagged as “highly vulnerable.”

“While home price growth over the past few years significantly outpaced levels supported by fundamentals, these imbalances have narrowed through growth in fundamentals and lower home prices in different segments of the resale market,” CMHC said in its latest Housing Market Assessment report.

The agency said a moderate degree of vulnerability remains at the national level, but imbalances between house prices and housing market fundamentals have narrowed over the past year. However, certain markets such as Toronto and Victoria are at higher risk.

Nationally, the inflation-adjusted average price decreased 5.6 per cent in the first quarter of 2019 from the same period a year earlier, the fifth-consecutive decline on a year-over-year basis, CMHC said.

READ MORE: B.C. housing sales predicted to slow, prices to fall in 2019

In the previous quarter’s report, CMHC lowered its rating for Canada’s overall housing market from to moderate from high vulnerability — where it had stood for 10 consecutive quarters — as mortgage stress tests introduced last year made it harder for homebuyers to qualify and eased price acceleration.

The Canadian Real Estate Association’s latest market forecast released in June projects that the national average price will drop 0.6 per cent by the end of this year to roughly $485,000, compared to the 4.1 per cent drop recorded in 2018.

However, the pattern is split between the eastern and western parts of the country. For example, while average prices are forecast to fall in British Columbia, Alberta and Saskatchewan, higher prices are expected in Ontario, Quebec and the Maritimes.

Dropping housing prices are a particularly welcome sight in Vancouver, which was cited in January as the second-least affordable major housing market in the world out of 91 markets by urban planning company Demographia. Vancouver came second to Hong Kong, but was less affordable than the likes of San Francisco and London, U.K.

The latest statistics from the Real Estate Board of Greater Vancouver showed that the benchmark price of a home in Metro Vancouver dropped to $998,700 in June, the first time it fell below the $1 million mark since May 2017.

The Bank of Canada in May also said that housing prices in the key markets of Vancouver and Toronto have cooled, but imbalances in real estate markets are still an important vulnerability for the overall financial system.

CMHC’s bases its vulnerability assessment on several criteria including price acceleration, overvaluation, overbuilding, and overheating. It examines the degree of vulnerability and is intended to identify imbalances in the housing market.

Toronto, Hamilton and Victoria continue to have a high degree of vulnerability, but overheating, price acceleration and overvaluation show signs of abating in all three markets.

Edmonton, Calgary, Saskatoon, Regina and Winnipeg have moderate vulnerability, but evidence of overbuilding remains.

Ottawa, Quebec City, Halifax, St. John’s, N.L., Montreal, Moncton, N.B., all have low overall vulnerability. However, overheating persists in Montreal and Moncton while overbuilding remains in St. John’s, CMHC added.

For the second consecutive quarter, moderate evidence of overvaluation continues to be the only sign of vulnerability for Canada as a whole, said CMHC’s chief economist Bob Dugan.

“Imbalances between house prices and housing market fundamentals have narrowed with declining home prices in the resale market and a growing pool of potential first-time homebuyers,” he said in a statement. “This dynamic contributes to closing the overvaluation gap.”

Armina Ligaya, The Canadian Press

Like us on Facebook and follow us on Twitter.

Just Posted

Grieving South Surrey mom ‘disappointed’ province not moving quicker to fix recovery homes

Min. Judy Darcy says new regulations, effective Dec. 1, follow ‘many horror stories’

B.C.’s health, addictions ministers to announce changes to recovery-house rules

Safety, quality of care targeted; South Surrey parent whose son overdosed ‘curious’ about amendments

Surrey school district unveils its first rainbow crosswalk

Superintendent Jordan Tinney says colour crossing ‘a statement that everyone is welcome in Surrey’

Potters’ House of Horrors sets date for opening weekend in Surrey

The ‘Death Valley Motor Inn’ is an all-new haunted house this year

Date set for complete closure of North Surrey Recreation Centre

Users will be directed to programs and services within a four-kilometre radius of the site

VIDEO: Title of 25th Bond movie is ‘No Time to Die’

The film is set to be released in April 2020

BREAKING: Body found believed to be missing Chilliwack senior with dementia

Police says case is now in the hands of the coroner

B.C. seniors allowed more choice to stay in assisted living

Province doesn’t need to wait for a complaint to investigate care, Adrian Dix says

Liberals block hearings into scathing ethics report on SNC-Lavalin affair

Dion concluded in his report last week that Trudeau broke the Conflict of Interest Act

Retired Richmond fisherman wins record-breaking $60M Lotto Max jackpot

Joseph Katalinic won the biggest Lotto Max prize ever awarded

‘Unsubstantiated’ bomb threat against CP Rail in Revelstoke

On Aug. 18, a bomb threat was made against CP Rail in Revelstoke

Victoria father charged with double murder of his daughters takes the stand

Andrew Berry pleaded not guilty to the December 2017 deaths

New ‘Matrix’ film set with Keanu Reeves and Lana Wachowski

Fourth installment to feature Reeves as Neo and Carrie-Anne Moss as Trinity

Most Read

l -->