The number of residential properties listed on the resale market has been steadily decreasing since 2016, at an annual rate of 4 to 7 per cent. This trend gives sellers the upper hand, and a further tightening of supply and demand conditions would lead to housing market overheating. Mathematically, a market is considered overheated when the ratio of the number of sales to the number of new listings is greater than 0.70 (or 70 per cent).
Several socio-economic factors contribute to the increase in demand, but the CMHC mainly focuses on the factors that contribute to the decrease in supply. Strong demand automatically implies a reduction in the number of new listings, since in a market where demand is low, the same property can be put up for sale several times in the same year.
The CMHC also points out that there has been a slowdown in construction in recent years. In addition, in markets where demand is strong, developers tend to sell their condominiums themselves, without an intermediary: thus, these condos are not included in the number of new listings.
All of these factors promote a downward trend in supply on the residential market. There will therefore continue to be constant upward pressure on prices, at least in the short term.