Three Canadian housing markets are overpriced – IMF

Three of Canada’s largest housing markets are overpriced, according to calculations by the International Monetary Fund (IMF).

IMF’s calculations were split into observed aggregate and attainable prices. The observed aggregate price refers to the price of a typical home per market, while the attainable price is the price that the broad market can support.

IMF found that there were massive gaps between the observed and attainable prices in Hamilton, Toronto, and Vancouver in Q3 2018.

In Hamilton, the observed price reached $540,077, up by 3.1% from the previous year. The attainable price hit $343,736, falling by 3.6% over the same period. The gap between the two was 57.1%, the highest in the country.

In Toronto, the observed price was $856,003, down by 3.1% from a year before. The attainable price was $553,467, down by 3.6% over the same period. That placed the last observed price 54.7% higher than the attainable price.

“Most of Toronto’s gap could be explained by credit growth, until about 2015,” Better Dwelling said.

In Vancouver, the observed price was $1,134,157, up by 1.6% from the previous year. The attainable price fell to $749,505, down by 3.6% over the same period. The gap between observed and attainable prices was 51.3%.

Aside from these three markets, the observed prices were also higher than the attainable prices in Winnipeg, Victoria, Montreal, Calgary, Edmonton, Ottawa, and Quebec.

Only Halifax saw a negative percent difference between observed and attainable prices (-1.71%).