The federal housing agency (CMHC) has lowered its assessment of the health of the national housing market to “moderate,” from “high,” according to a report issues on Thursday.
Canada Mortgage and Housing Corp. cited evidence of easing price acceleration for the country as a whole, primarily supported by much better fundamentals and prices in the Toronto and Vancouver markets.
After being rated “high” for 10-straight quarters, the overall degree of vulnerability for Canada has changed to “moderate,” the agency said in the report.
Home sales and prices have slowed in Canada after governments at various levels took steps to mitigate the risks of a crash. The federal banking regulator imposed stress tests on new mortgage lending last year, a measure that has been particularly controversial. Toronto-Dominion Bank and Canadian Imperial Bank of Commerce, along with realtor groups and home builders, have argued the rules should be eased, saying they are punishing first-time buyers. Bank of Canada Governor Stephen Poloz said last week that after a “huge run up in housing,” speculation is coming out of the Toronto and Vancouver housing markets, but more time may be needed for it to settle out completely.
CMHC said its assessment of overvaluation in Vancouver has changed to moderate from high, and the “conditions of overheating are easing as well.” Vancouver, Toronto, Victoria, British Columbia, and Hamilton, Ontario continue to see a “high degree of vulnerability” in the overall assessment, “but house prices are moving closer to levels supported by housing market fundamentals” in those cities.
That said, CMHC flagged “evidence of overheating” in the Montreal and Moncton, New Brunswick resale markets. Also, vulnerability remains “moderate” for the western cities of Edmonton, Calgary, Saskatoon, Regina and Winnipeg due to “evidence of overbuilding” in these cities.
The report is based on data through the end of 2018.
With mortgage rates stable, with no anticipated hikes for the remainder of 2019, the soft landing was successfully engineered by various government agencies.
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