OTTAWA, Ontario – The coronavirus pandemic continues to unsettle the Canada’s housing market, according to an analysis of the Canada Mortgage and Housing Corporation (CMHC).
In releasing its first Housing Market Assessment since before the Covid-19 pandemic led to nation-wide efforts to mitigate its spread, CMHC said weakening housing market fundamentals and an increase in average overvaluation estimates in the second quarter of 2020 have resulted in Canada’s housing market retaining a “moderate degree of vulnerability.”
The CMHC incorporated housing data from the end of June, apartment vacancy rates from October 2019 and “market intelligence” through August to base its analysis. The national report also provides the housing assessment for 15 Census Metropolitan Areas.
Highlights of the report include:
- The COVID-19 pandemic has affected all regions of the country.
- Prior to the second quarter of 2020, Vancouver and Toronto were experiencing a general unwinding of housing market imbalances.
- Vancouver and Toronto saw an increase in observed house prices in the second quarter of 2020 despite the COVID-19 driven decline in their estimated fundamental house prices. This has led to an increase in average overvaluation estimates in both housing markets.
- The Ottawa, Moncton and Halifax housing markets are all now assessed at an overall moderate degree of vulnerability.
- Ottawa, Montréal, Moncton and Halifax entered the second quarter of 2020 with emerging imbalances in their respective housing markets.
- Observed house prices in all four CMAs had been growing prior to the onset of COVID-19 and continued growing in the second quarter, despite the general weakness in housing market fundamentals. This has led to the detection of moderate evidence of overvaluation in Moncton and Halifax while a sustained increase in the rate of house price growth has led to the signaling of price acceleration in Ottawa and Montréal.
- The COVID-19 pandemic and downward pressure on oil prices further aggravated Edmonton and Calgary’s recent economic challenges. House prices in these Prairie centres fell in the second quarter of 2020. The rate of decline is below what can be explained by housing market fundamentals alone. This has led to an increase in average overvaluation estimates in both housing markets between the first and second quarters of 2020. Evidence of overbuilding that was first detected in 2015 is still present in both markets.
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