The Housing Market Assessments (HMAs), published quarterly, analyze Canada’s housing markets and give a comprehensive view of their vulnerabilities. The HMAs consider 4 main factors: overheating, price acceleration, overvaluation and overbuilding. The information and analysis provided can help Canadians make more informed decisions and contribute to an orderly adjustment of housing market imbalances.

We publish a national HMA, as well as separate ones for 15 census metropolitan areas (CMAs).

The latest edition of the national HMA covers market data up to the fourth quarter of 2018.

Overall vulnerability eased from “high” to “moderate”

After being rated “high” for 10 straight quarters, the overall degree of vulnerability for Canada as a whole has changed to “moderate”. Here’s a quick look at why:

  • The inflation-adjusted MLS® average price fell by 5.4% in the fourth quarter of 2018 from the same quarter in 2017.
  • Inflation-adjusted personal disposable income dropped by 1.2%. However, the young-adult population grew by 1.9%, continuing to increase the pool of potential first-time homebuyers.

Declining prices combined with growth in potential first-time buyers reduced the average estimate of overvaluation in the last quarter of 2018.

Moderate evidence of overvaluation continues to be detected. However, the average estimate of overvaluation has stayed close to 0 over the past 3 quarters.

Also, evidence of price acceleration has eased to “low”. Evidence of overheating and overbuilding, meanwhile, remains low.

All of these factors, together, brought the overall degree of vulnerability for the national housing market down to “moderate”.

Regional differences persist

While the degree of vulnerability has been changed to “moderate” for Canada as a whole, there are regional differences. Here’s a quick look at a few key CMAs:

Vancouver: high degree of vulnerability

Home price growth over the past few years significantly outpaced income growth. However, these imbalances are now narrowing. Our analysis indicates an easing of overheating and overvaluation. The ratings for price acceleration and overbuilding, though, have been maintained.

Toronto: high degree of vulnerability

Overheating, price acceleration and overvaluation continue to be flagged in Toronto. However, overvaluation continues to ease, as house prices become more closely aligned with housing market fundamental factors. In the fourth quarter of 2018, the inventory of completed and unsold units declined to its lowest level on record. The result: low evidence of overbuilding.

Montréal: low degree of vulnerability

The degree of overall vulnerability has remained low for Montréal for about 2 years now. Prices have remained in line with economic and demographic fundamental factors. In addition, evidence of overbuilding remains low. However, evidence of overheating is now detected because of significant tightening between supply and demand on the resale market.


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Date Published: May 2, 2019