CMHC refuses to reduce rating despite housing market improvement
Published: October 28, 2017
Updated: July 24, 2018
Author: Luke Jones
CATEGORY: Industry News
The federal government and the financial industry are trying to balance Canada’s housing mrker with policy changes, but the Canada Mortgage and Housing Corporation (CMHC) says the market it still classed at high-risk.
In its latest Housing Market Assessment, the CMHC removed its “strong” terminology for housing risk and downgraded to “high”. Nevertheless, the market remains a worry for the firm and there are issues present that could lead to a crash if key players are not careful. Overvaluation of properties and a pondering price acceleration remain concerning factors that have not been addressed.
It is worth noting the report is built on data collected in the second quarter and does not address Q3.
Price growth has dropped significantly since the start of 2017, but CMHC is still sticking to its high-risk rating. The firm says it needs to see 12 consecutive quarters with little evidence of price acceleration before it makes lasting conclusions.
Toronto and surrounding Ontario cities continue to have overvaluation problems, although there has been a decrease over recent quarters. New policies in Toronto have helped to slow the market, but CMHC says it will need to see two consecutive quarters of improvements before it lowers its overheated rating.