Oct 26, 2016

By Michael Kramer

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Canada’s federal housing agency says it is seeing more evidence of risk in real estate markets – with home prices climbing faster than income and population growth.

The national housing market risk has been dialed up to “strong,” from the “moderate” rating – that Canada Mortgage and Housing Corporation assessed the market at in July.

And continued overvaluation is the culprit – which means home prices aren’t fully supported by economic fundamentals such as income, mortgage rates and population growth.

The agency also finds evidence of price acceleration – which happens when prices go up at a faster pace – and show a possible sign of speculation – as properties are bought and sold purely for profit.

CMHC also predicts that the pace of new housing starts will decline next year – before stabilizing in 2018.

CEO Evan Siddall said earlier this month that the housing agency would push its risk rating to “strong” for the first time ever – when it releases its quarterly housing market assessment.

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