According to Canada Mortgage and Housing Corporation (CMHC)’s latest Housing Market Assessment (HMA), overvaluation has been detected in nine Census Metropolitan Areas (CMAs), while overbuilding has been found in seven. On a national scale, CMHC has detected moderate evidence of overvaluation, but shows weak evidence of problematic conditions overall.

The HMA is used to detect areas of concern developing in Canada’s housing markets so that action may be taken to increase market stability.

“While we see weak evidence of problematic conditions overall nationally, we do detect moderate evidence of overvaluation, meaning house prices remain higher than the level personal disposable income, population growth and other fundamentals would support,” said Bob Dugan, CMHC chief economist, in a press release.

Across all 15 CMAs, overvaluation and overbuilding are the most prevalent problematic conditions impacting housing markets. In Vancouver, Hamilton and Saskatoon, the evidence of overvaluation has increased since the previous HMA was released. Toronto is showing strong evidence of problematic conditions due to the combination of price acceleration and overvaluation. Calgary, Saskatoon and Regina CMAs are all showing strong evidence of problematic conditions due to the combination of overvaluation and overbuilding.

Vancouver, Montreal, Edmonton, Ottawa, Winnipeg and Quebec’s CMAs are all indicating moderate evidence of problematic conditions overall, while Victoria, Hamilton, Moncton, Halifax and St. John’s CMAs show weak evidence of problematic conditions.

According to CMHC, a housing market shows evidence of problematic conditions if it is imbalanced due to overbuilding, overvaluation, overheating or price acceleration, or any combination of them, in a way that differs significantly from historical averages.

To read the complete HMA, please click here.