A study by Canada Mortgage and Housing Corp. says Toronto and Montreal’s residential construction is soaring and may result in overbuilding if housing units are completed but not sold.
The report suggests that builders must hit the “appropriate balance” and make sure demand is evenly spread between units under construction and unsold, to units that remain in the planning phase.
CMHC said the country has a “modest amount of overvaluation,” but the government housing agency did not detect any problems such as overheating, price acceleration, and overbuilding. The findings were published in CMHC’s first House Price Analysis and Assessment Framework
The housing agency also listed Toronto, Montreal and Quebec City to be at the moderate overall risk category, while the rest of Canada’s biggest cities at low risk.
CMHC adds that the year-to-date price growth declined 1% in Quebec City, 6.3% in Vancouver, and 8.1% in Toronto.
“This underscores the importance of drilling down to smaller geographies in order to get a true picture of price performance,” CMHC said.
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