Canadian housing starts climb, sparking fears market is overheating
Posted on Nov 21, 2013 in Mortgage Market Updates and NewsReuters
TORONTO — Canadian housing starts rose more than expected in October and September starts were revised higher, according to data released on Friday that will add to fears the property sector could be overheating.
Data from the Canada Mortgage and Housing Corp showed the seasonally adjusted annualized rate of housing starts was 198,282 units last month, up from an upwardly revised 195,929 in September and surpassing analysts’ expectations for 190,800.
Multiple urban starts registered a slight increase of 0.9% to 115,011 units in October while the single urban starts segment saw a decrease of 1.7% to 62,423 units, the federal housing agency said.
“The trend in total housing starts has gained momentum since July, which is in line with expectations that new construction would strengthen over the second half of 2013,” Mathieu Laberge, deputy chief economist at CMHC said.
Canada’s housing market has rebounded in 2013 after a sharp slowdown in the second half of 2012 when the government tightened mortgage lending rules to prevent homebuyers from taking on too much debt.
While the tighter policy slowed the market from what many had feared was a developing bubble, renewed strength in 2013 have led some to fear prices will again accelerate. The more sanguine consensus from economists at Canada’s big banks – who are major mortgage lenders – is that the market has achieved a soft landing and will now bump along at healthy levels.
CMHC’s Laberge said gains since July have been broad-based, with increasing activity in large and small urban centres, particularly in Ontario, Canada’s most populous province, and in British Columbia.
“Housing starts remain on target with our projected total for 2013, which is expected to range between 179,300 and 190,600 units,” Laberge said in the report.
In October, the seasonally adjusted annual rate of urban starts increased in Ontario while decreasing in British Columbia, Atlantic Canada, the Prairies, and Quebec.