CMHC says 'no housing bubble' forming in Canada
The CMHC's report, called House Price Analysis and Assessment, will reassure some of those who think that Canada's housing market is due for a major price correction.
November 26, 2014 by Steve Payne
Even with the average resale price of a Canadian home up 6.9 per cent in the past year, compared to just 1.9 per cent inflation under the Consumer Price Index, there is “no housing bubble” forming in Canada that should lead to a major correction of prices, says the Canada Mortgage and Housing Corporation (CMHC) in publishing the results of its House Price Analysis and Assessment.
The report analyzes resale housing prices in Canada’s 8 largest metropolitan areas.
It says that, while there is no current “housing bubble,” there is still a “moderate” risk of future overbuilding in Toronto, Montreal and Quebec City if builders are not careful to match new housing starts with sales of their existing inventory. But the report says the risk of overbuilding is “low” in Vancouver, Edmonton, Calgary, Ottawa and Halifax.
In an excellent summary of the CHMC’s report, here in the National Post, Peter Norman, a well-known Canadian housing analyst (Altus Group), makes an intriguing statement. He says that housing investment in Canada is actually at an almost “historic” low.
How can this be, when so many cities have their skylines filled with cranes and when the condo boom is throwing up high-rises like weeds?
Easy, Norman says: A high-rise building has less than half the investment value per unit of traditional ground-based homes like detached homes, semis and townhouses. And as detailed elsewhere in the report, high-rises now represent well more than half of all new residential construction.