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[CMHC] Ontario House Prices: Low Likelihood of a Serious Price Correction

[CMHC] Ontario House Prices: Low Likelihood of a Serious Price Correction

by Yvonne von Jena | June 15, 2018


Canada Mortgage and Housing Corporation (CMHC) released today its latest Ontario Housing Market Insight report, which looks at home price trends and whether the province is currently in a corrective or price bust phase. Based on CMHC’s fundamental and technical analysis, it says that there is a low likelihood of a serious price correction in Ontario. CMHC says that this is supported by:

  • The combination of the level of overvaluation easing in Toronto
  • Growing employment and income rates, new households formed, and
  • Only moderate increases in interest rates

In 2018 and 2019, relatively low interest rates and government spending hikes will continue to support real estate in the province.

Key Highlights

Here are key highlights from CMHC’s report:

  • Price growth, but at a moderated pace: Ontario home prices will continue to grow but at a more moderate pace that is in line with the rate of inflation.
  • Additional market characteristics: CMHC believes there will be:
    • More balanced markets
    • More properties will remain on the market longer
    • Less speculation
    • Less bidding wars
  • Impact of home types: The type of homes expected to sell will also shape the behaviour of future prices. Fewer single-family home sales are expected to be in the mix of all homes sold, which will restrain overall price appreciation and will be particularly true in more expensive markets such as Toronto and Hamilton.
  • Buyers’ and sellers’ expectations:
    • Prospective buyers should benefit from the presence of balanced markets, less urgency to act and therefore more informed decision-making
    • Homeowners’ home price expectations may take some time to normalize while their expectations come in line with market realities, which could lead to homes staying on the market longer than usual
  • The Ontario and Greater Toronto Area (GTA) economies: These are expected to grow more moderately but to continue to provide underlying support for provincial real estate prices in 2018 and 2019, supported by the combination of stronger government spending and moderate interest rate increases


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