Moderate market overheating index

Montreal and Quebec City are showing a "moderate" index of market overheating, notes the CMHC in its 3rd quarter 2020 report published on December 14 and covering the period ending in June. In the case of the Quebec City region, the index was "low" in February, but has just gone up a notch. For the Montreal region, the report shows the acceleration of prices, whose "low" index in February is now "moderate".

The Montreal resale market is showing some signs of overheating, which is causing prices to rise faster, and the possibility of an additional imbalance should be monitored. The supply of properties on the market is the lowest in 16 years in the Greater Montréal area. For these reasons, moderate signs of overheating are still being detected on the market," explains the CMHC. Sellers have been favoured for nearly four years for single-family homes and for the past two years for condominiums. However, there is no evidence of overvaluation yet, although prices have risen slightly faster than other fundamental factors such as household disposable income (supported by government measures) and population growth.

In the Quebec City area, although there were signs of overheating in the second quarter of 2020, the overall degree of vulnerability of the housing market there remains low, as signs of accelerating prices, overvaluation and excessive construction remain weak, CMHC analyses. However, it calls for some caution, as the unprecedented financial support from the government during this pandemic conceals personal disposable income that has likely been more affected than current figures reveal.