Prices of houses in Canada, particularly in major regions such as Vancouver and Toronto, have been skyrocketing and the boom is expected to continue. Despite the high prices, home sales have also reached record high in March. Now recent report revealed that nine of the 15 real estate markets have overvalued homes based on evidence.
Federal housing agency Canada Mortgage and Housing Corp. said in its latest report that there are growing evidence that house prices in most of the real estate markets in Canada are not fully supported by incomes and economic fundamentals, Toronto Sun reported.
Between January and April, the report said that there was strong overvaluation in Vancouver and Saskatoon from a previous moderate rate. The growth in overvaluation in Vancouver is attributed to the red-hot prices while in Saskatoon, the drivers are the underlying economic conditions such as unemployment and population growth.
Meanwhile, Hamilton also saw its overvaluation from weak to moderate as people are migrating from less affordable cities like Toronto, driving home prices up in the first quarter of this year, the housing agency's report added.
In an earlier report, CBC News noted that average home prices in Canada climbed 15 percent in March to $508,567 compared to the same period in 2015. The surge is largely driven by price increases in Vancouver and Toronto. Taking out these two cities, the average house prices would be $366,950 at 10.4 percent increase year over year.
But despite the price increases, the volume of homes sold reached an all-time high with around 45,137 properties sold, according to realtor group the Canadian Real Estate Association. Last month, sales jumped 12.2 percent from a year earlier, which is also 14.2 percent higher than the 10-year average for the month of March.
Experts say that home prices and sales activities increases are likely to continue as no signs of slowing down are seen in the immediate future, per CBC News.
