Canada’s housing agency says there is evidence of increasingly “problematic conditions” in the national home market, prompting it to upgrade its assessment of the country’s troubling signs from weak to moderate.

One of those signposts has been planted just down the road from Toronto in the neighbouring city of Hamilton.

A third-quarter report from Canada Mortgage and Housing Corp. (CMHC) on Wednesday said overvaluation in Hamilton was similar to that of Toronto’s property market.

That means home prices are higher than would normally be explained by factors such as population, employment and income.

There’s no specific data proving Torontonians are moving west on the QEW in search of cheaper housing, said Abdul Kargobo, CMHC analyst for the city of about 520,000 people.

“But if we look back to 2013, we do see that Hamilton is attracting some buyers that are priced out of Toronto because Hamilton is relatively affordable,” he said.

The economic development department in Hamilton recently reported its average home price of $451,000 was nearly half that of Toronto’s $940,000.

“The sales-to-new-listings ratio was 84 per cent, reaching its highest quarterly level on record and significantly above the 75-per-cent threshold used to identify evidence of overheating,” said CMHC’s Housing Market Assessment report.

The other hot Toronto-area market is Durham Region, according to CMHC analyst Dana Senagama. The east end of the region is attracting many first-time buyers with housing prices that are significantly lower, she said.

“There are supply constraints, but the advantage Durham has is that it is about 50 per cent less on average in terms of house pricing,” she said.

The Toronto area’s housing vulnerabilities continued to be termed “strong” in the third quarter. But, in its latest report, CMHC put Vancouver in the same assessment category.

Both cities are experiencing overheating, overvaluation and price acceleration according to the CMHC study and each has consumers paying record sums in aggressive bidding wars.

On Monday, the British Columbia government also announced a 15-per-cent tax on property transactions involving foreign buyers, also considered to be a factor driving that market.

Also contributing to CMHC’s national assessment is a combination of overvaluation and overbuilding in cities such as Calgary, Saskatoon and Regina, said Bob Dugan, the agency’s senior economist.

If CMHC detects more broad-based price acceleration in the future as Toronto and Vancouver market conditions spread to neighbouring areas, its next assessment could be upgraded further from moderate to strong, he said.

Average Toronto home prices climbed 16.8 per cent year over year in June, according to the Toronto Real Estate Board.

A lack of single-family homes has continued to push Toronto prices higher.

“Fewer launches of new single-detached projects in recent years meant demand has been increasingly absorbed by the resale market,” said CMHC.

That, in turn, is pushing more buyers into condos and a low vacancy rate in the rental market is also helping absorb unsold highrise units, it said.

The report is further evidence, the building industry said, that provincial intensification polices are driving up home prices in the Toronto area.

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“The homebuilding industry has been consistent in its advocacy to increase housing choice in the GTA marketplace. The industry is building far fewer lowrise homes, especially single-family detached homes, today because we are mandated to,” said Bryan Tuckey, CEO of the Building Industry and Land Development Association.

The CMHC assessment is based on a number of signals in 15 major Canadian markets.

The objective is to identify signs of instability in housing prices.

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