OTTAWA, Oct 26 (Reuters) - There is strong evidence that many Canadian housing markets are overvalued, the federal housing agency said on Wednesday, but it tempered the warning with a forecast projecting cooler housing starts, sales and prices in 2017 and 2018.
“Canada now shows strong evidence of problematic conditions overall due to overvaluation and price acceleration,” the Canada Mortgage and Housing Corp said in its quarterly housing market assessment.
“However, the combination of overvaluation and overbuilding should help slow the growth in resales and house prices and lead to a moderation in the pace of housing starts,” it said.
The head of the CMHC Evan Siddall warned last week that the agency would raise its overall risk rating for the national housing market to “strong” for the first time because affordability concerns have spread beyond the two most expensive markets, Toronto and Vancouver.
The federal government earlier this month tightened mortgage lending and tax rules in a bid to prevent homebuyers from taking on too much debt and to make foreign investment harder, the latest attempt by policymakers to prevent a U.S.-style housing crash after the boom. (Reporting by Andrea Hopkins; Editing by Meredith Mazzilli)