Invest in Canada » Housing starts

Real estate recovery expected to be tepid

Maximillian — Thu, 02 Jul 2009 17:53:14 +0000

The worst of Canada’s housing market woes appear to be past but the sector’s rebound will be tenuous as a rise in mortgage rates and high unemployment limit the recovery in prices and sales.

Property experts say first-time buyers and Bank of Canada rate cuts have helped restore stability to a market that slumped from late 2008 to early this year, when the worst leg of the global financial crisis battered consumer confidence.

“We should be less fearful than we were six months ago, but I don’t think we should be exuberant yet. The resale markets in Canada are very strong. May numbers were pretty good, and June numbers will be even better,” said Will Dunning, an economic consultant who specializes in the housing market.

“But by July and into the fall there will be an offset of considerably slower activity. I don’t think it’s likely to go off a cliff. It’ll depend on what happens in employment and the broader economy, and how that affects confidence.”

Recent data suggest Canada’s residential property market, which weathered the financial crisis much better than its hard-hit U.S. counterpart, has been thawing for several months.

The latest Canadian Real Estate Association data shows May resale home prices rose 0.4 per cent to $319,757, topping the previous record set a year earlier. It was the first year-over-year increase since May last year. And sales activity climbed for a fourth straight month.

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Home construction rebounds

investor — Wed, 08 Apr 2009 16:46:42 +0000

Construction of new homes picked up a “mind-boggling” 13.7 per cent in March, despite expectations for a continued slide.

Housing starts rose last month to 154,700 units, at a seasonally adjusted annual rate, an increase from the 136,100 pace seen in February, Canada Mortgage and Housing Corp. said Wednesday.

Construction of condominiums in central Canada was mainly responsible for the rebound.

The surge was “mind-boggling” and puts a halt to a six-month slide in home building activity, said Millan Mulraine, economics strategist at TD Securities.

“On the surface, this was a very strong report,” he said. “… However, in the grand scheme of things, the key economic fundamental factors continue to point to further weakness in Canadian housing sector activity.”

Most of the increase stemmed from a large increase in condominiums in Ontario and Quebec, a market segment that some experts warn is volatile and in danger of being overbuilt. Urban multiple housing starts rose 28.3 per cent, to 81,500 units.

But construction of new single homes also increased, up 1.3 per cent to 46,400 units in March.

“Higher multiple starts in Ontario and Quebec were the main contributors to the rise in new construction activity in March,” said Bob Dugan, CMHC’s chief economist. “While the multiples segment experienced the largest increase, the overall boost in starts was broad based, encompassing the singles segment as well.”

Economists had expected home building to pull back again in March, to about a pace of 130,000 new units a year, seasonally adjusted.

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Housing starts fall 11% in January

investor — Mon, 09 Feb 2009 17:13:47 +0000

Housing starts declined last month in Canada as falling sales for existing homes weakened demand for new construction, Canada Mortgage and Housing Corporation said Monday. Construction began on 153,500 units in January, on a seasonally adjusted annual rate, down from 172,200 the previous month, CMHC said.

Urban housing starts dropped 15.6% to 126,700 units last month, with single units falling 20.2% to 50,000 and multiple dwellings declining 12.1% to 76,700. “To a certain extent, the decline in housing starts coincides with recent developments in the existing home market,” said Bob Dugan, CMHC’s chief economist. “Reduced sales and increased listings in the existing home market have led to reduced spillover demand in the new home market.”

All regions of Canada saw declines in housing starts in January, CMHC said. Urban construction fell 8.6% in Atlantic Canada, while Quebec experienced a 1.4% drop, Ontario at 14.6% decline, the Prairies 30.3% and British Columbia 29.1%. Meanwhile, there were 26,800 units stared in rural areas.

Charmaine Buskas, economics strategist at TD Securities, said Canada’s housing market “is under a great deal of pressure.”

“The combination of an increasingly weak labour market and lingering concern about the state of the economy has left consumers unwilling to take the plunge into the housing market,” she said.

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