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But Scotiabank says increases mostly in condos
Dec. 9, 2006. 01:00 AM
DAVID PADDON
CANADIAN PRESS
November turned out to be a better month for housing starts than expected, building on a strong October and setting the stage for 2006 to be "a very good year for Canada's housing market," in the words of one economist.
Yesterday's Canada Mortgage and Housing Corp. report showed seasonally adjusted housing starts for the month rose to 225,000, up just 0.8 per cent from 223,200 in October, but better than a mild decline that had been expected.
The consensus forecast had been for 220,000 starts in November.
In contrast to the U.S. housing market, where there have been significant slowdowns in some regional markets in 2006 after extremely hot sales in 2005, the Canadian housing market seems stable.
But some underlying details may not be so rosy.
A Scotia Capital commentary, for instance, pointed out that starts of single-family dwellings fell 4.2 per cent from October, while all the gains came from construction of multiple-family dwellings such as condos and townhouses.
There was also a wide geographic disparity, with the Prairies and Atlantic Canada accounting for nearly all the growth — while Quebec, Ontario and British Columbia showed declines from October.
The biggest drop was in Quebec, off 11.7 per cent, but that followed strong growth in October, which had been up 28 per cent from the month before.
Ontario's starts were down 3.8 per cent from October and B.C.'s were down 7.9 per cent. But Prairie housing starts were up 26 per cent and the Atlantic provinces saw a 21.4 per cent increase.
Scotia Capital acknowledged that the level of starts is still high and on track for 2006 to do better than last year.
"However, despite the (mild) gains over the last two months, starts have decelerated rather significantly. This was seen in the Q3 GDP report, as well as in the three-month annualized decline of nearly 16 per cent," Scotia Capital's commentary said.
Housing starts are closely watched as a major indicator of the economy's health.
"Today's report, combined with a tight labour market and real wage gains, provides evidence that the domestic economy remains on solid ground and falls in line with the Bank of Canada's assessment that one of the upside risks to its forecast is continued strength in housing market activity," according to RBC Economics.
That said, RBC added, the report is unlikely to change its view that current overnight interest rates are appropriate to keep inflation within the medium-term target.
David Tulk, an economist at Toronto Dominion Bank, also noted the slight slowdown, but added, "with just a single month remaining under wraps, it is safe to say that 2006 has been a very good year for Canada's housing industry."
CMHC reported that growth in multiple-unit construction in 2006 was underpinned by low mortgage rates, a steady employment picture and by the lower average price of multiples relative to single detached homes.
Dec. 9, 2006. 01:00 AM
DAVID PADDON
CANADIAN PRESS
November turned out to be a better month for housing starts than expected, building on a strong October and setting the stage for 2006 to be "a very good year for Canada's housing market," in the words of one economist.
Yesterday's Canada Mortgage and Housing Corp. report showed seasonally adjusted housing starts for the month rose to 225,000, up just 0.8 per cent from 223,200 in October, but better than a mild decline that had been expected.
The consensus forecast had been for 220,000 starts in November.
In contrast to the U.S. housing market, where there have been significant slowdowns in some regional markets in 2006 after extremely hot sales in 2005, the Canadian housing market seems stable.
But some underlying details may not be so rosy.
A Scotia Capital commentary, for instance, pointed out that starts of single-family dwellings fell 4.2 per cent from October, while all the gains came from construction of multiple-family dwellings such as condos and townhouses.
There was also a wide geographic disparity, with the Prairies and Atlantic Canada accounting for nearly all the growth — while Quebec, Ontario and British Columbia showed declines from October.
The biggest drop was in Quebec, off 11.7 per cent, but that followed strong growth in October, which had been up 28 per cent from the month before.
Ontario's starts were down 3.8 per cent from October and B.C.'s were down 7.9 per cent. But Prairie housing starts were up 26 per cent and the Atlantic provinces saw a 21.4 per cent increase.
Scotia Capital acknowledged that the level of starts is still high and on track for 2006 to do better than last year.
"However, despite the (mild) gains over the last two months, starts have decelerated rather significantly. This was seen in the Q3 GDP report, as well as in the three-month annualized decline of nearly 16 per cent," Scotia Capital's commentary said.
Housing starts are closely watched as a major indicator of the economy's health.
"Today's report, combined with a tight labour market and real wage gains, provides evidence that the domestic economy remains on solid ground and falls in line with the Bank of Canada's assessment that one of the upside risks to its forecast is continued strength in housing market activity," according to RBC Economics.
That said, RBC added, the report is unlikely to change its view that current overnight interest rates are appropriate to keep inflation within the medium-term target.
David Tulk, an economist at Toronto Dominion Bank, also noted the slight slowdown, but added, "with just a single month remaining under wraps, it is safe to say that 2006 has been a very good year for Canada's housing industry."
CMHC reported that growth in multiple-unit construction in 2006 was underpinned by low mortgage rates, a steady employment picture and by the lower average price of multiples relative to single detached homes.