UPDATE 1-Canada housing agency sees overvaluation signs across country
(Adds details from report, background)
OTTAWA, July 27 (Reuters) - Canada's housing market is showing strong signs of overvaluation as prices have surged, the federal housing agency said on Wednesday, becoming the latest authority to voice concern about the country's multi-year property boom.
Canadian home prices have soared in the years since the 2008 financial crisis, boosted by record-low borrowing costs.
A more recent ramp up in the Toronto and Vancouver markets has raised concerns among policymakers, prompting the creation of a government working group and a new British Columbia tax on foreign buyers.
The Canada Mortgage and Housing Corporation (CMHC), which advises the federal government, said on Wednesday in its third-quarter report that evidence of problematic conditions in the national market has increased to moderate from weak in its previous report.
The agency noted real prices increased by 14 percent between the first quarter of 2015 and the first quarter of this year. That compares to a 9 percent increase between the end of 2014 and the end of 2015.
"House prices across Canada remain higher than levels consistent with personal disposable income, population growth and other fundamental factors," the report said.
However, it noted price acceleration was concentrated in Toronto and Vancouver. Excluding the two major cities, annual price growth in Canada would have been just 5.9 percent as of the first quarter, CMHC said.
If price acceleration continues and expands, the level of evidence of problematic conditions will likely be raised to high in its next report, the agency said. Continued...