Greater Victoria’s housing market remains “highly vulnerable” as a result of overheating and price acceleration, according to a study by Canada Mortgage and Housing Corporation.
In its quarterly housing market assessment, CMHC said sales are still outstripping inventory and prices remain high, though it did note there are signs that may be short-lived.
“After climbing up for 15 consecutive quarters on a year-over-year basis, the inflation-adjusted average [sale] price dropped by 5.8 per cent in the first quarter of 2019 from a year ago,” the report said. “Meanwhile, the young-adult population and the inflation-adjusted personal disposable income increased by 2.5 per cent and 0.3 per cent, respectively.
“The decline in price and growth in fundamentals have helped to narrow the average estimate of overvaluation in Victoria,” said the study.
In its previous quarterly report, CMHC described Greater Victoria's housing market as “moderately overvalued” and — like Vancouver, Toronto and Hamilton — Victoria’s market was deemed to be highly vulnerable.
CMHC said cities deemed vulnerable are unbalanced, which can occur through overbuilding, overvaluation, overheating and price acceleration.
The agency lowered the vulnerability rating of Vancouver’s housing market this time around to “moderate,” marking the first change in three years.
Vancouver has been labelled as “highly vulnerable” in 12 consecutive quarters. That only changed because there is now evidence price acceleration in Vancouver has eased.
CMHC also said a moderate degree of vulnerability remains at the national level, but imbalances between house prices and housing market fundamentals have narrowed over the past year while certain markets are at higher risk.