Evidence of overbuilding in Winnipeg’s housing market
WINNIPEG -- Winnipeg’s housing market is showing signs of overbuilding, according to the latest Housing Market Assessment.
The assessment, released by the Canada Mortgage and Housing Corporation (CMHC) on Thursday, looks at four main factors to determine housing market vulnerabilities: overheating, price acceleration, overvaluation and overbuilding.
It says overall there’s a low degree of vulnerability in the city’s market, except when it comes to overbuilding, which is when supply of available housing exceeds the demand.
According to the assessment, the number of unsold housing units in Winnipeg for every 10,000 people is above the threshold for overbuilding. This is because of elevated numbers of single-detached and multi-family units. The report notes that in the third quarter of 2019, the majority of finished but unsold housing in Winnipeg are single-detached homes.
Winnipeg’s apartment vacancy rate sits at 3.1 per cent, which is below the threshold for overbuilding.
The report says when it comes to overheating – when sales outpace new listings – the evidence is scarce for the Winnipeg census metropolitan area. It notes the resale market is balanced, and the sales-to-new-listings ratio in the third quarter of 2019 was 55.3 per cent.
There is also little evidence of price acceleration in the Winnipeg housing market, which is when the price of housing continuously increases.
The average price of a listing was $297,604 in the third quarter of 2019, which is down 0.3 per cent from the same quarter the year before.
The CMHC has changed Winnipeg’s degree of vulnerability for overvaluation from moderate to low.
Overvaluation is when housing price levels are above what can be supported by market fundamentals, such as personal disposable income, population and interest rates.
The report says the gap between housing prices and market fundamentals has decreased, noting the combination of population growth and low mortgage rates would support a price increase, but it didn’t.