By Sharon Singleton, QMI Agency
Canada’s real estate market showed no sign of losing steam in February, with housing starts rising faster than expected and a new survey showing 10% of Canadians expect to buy a home in the next two years.
Seasonally adjusted housing starts were 196,700 in the month, up from 185,400 in January, according to figures from the Canadian Mortgage Housing Corp. That was above analysts’ forecasts for a 190,000 gain.
RBC’s 17th annual home ownership study found that the number of Canadians saying they are very likely to buy a new home rose from 7% two years ago to 10%. The number of people who view their house as a good investment rose to a 12-year high of 91%.
Canada’s real estate market has been one of the main drivers of economic growth, with housing construction helping to power a 5% expansion in gross domestic product in the fourth quarter.
Some economists have forecast that the property market will begin to cool from the second half, when the Bank of Canada is expected to begin raising interest rates and demand and supply of available housing becomes more balanced.
“The gain in February housing starts was concentrated in the multiple starts segment, particularly in Toronto,” said Bob Dugan, chief economist at CMHC’s Market Analysis Centre.
Urban multiple starts, or condos, increased by 19.1% to 89,900 units while single urban starts increased by 0.5% to 89,200 units.
Urban starts rose 28.6% in Ontario, 14.3% in Atlantic Canada, 10.8% in the Prairie region and 8% in British Columbia. In Quebec, urban starts dropped 14.1%.
Rural starts were estimated at a seasonally adjusted annual rate of 17,600 units in February.
According to the RBC poll, younger Canadians between the ages of 18 to 24 are likely to lead the market. About 15% said they were likely to buy, almost double the number in 2009.
About 60% also believe housing prices will continue to rise this year, up from just 25% this time a year ago. They also expect mortgage rates to rise, with two-thirds expecting to have to pay more, the bank said.
That belief is being reflected in the choice of mortgage, with 16% opting for a variable rate loan compared with 20% last year.
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Posted in Ajax Real Estate, Buying Real Estate, Condos, Detached Homes, First Time Buyers, General Real Estate, New Homes, Pickering Real Estate, Scarborough Real Estate, Selling Real Estate, Semi-Detached Homes, Townhouses | No Comments »
By Ka Yan Ng – Reuters
Canadian housing starts rose a better than expected 6.1% in February, reinforcing views that the residential housing sector is a major force pulling the economy out of recession.
Starts on new homes rose to a seasonally adjusted annualized rate of 196,700 units in February from a downwardly revised 185,400 units in January, Canada Mortgage and Housing Corp said on Monday.
The number of starts in February surpassed the average forecast of analysts for 190,000. The January figure was a slight downward revision from the previously reported 186,300 units.
“Overall, with the better than expected gain in residential construction activity in Canada, it appears that the new homes market is slowly coming back to life and may finally be benefiting from the resurgence in overall housing market activity,” said Ian Pollick, economics strategist at TD Securities.
The Canadian dollar rose to a six-week high of 97.49 cents, following the housing data. Its currency pared gains as details showed most of the strength was due to a 19.1% surge in the volatile multi-dwelling group.
That group, which includes high-rise condos, soared to 89,900 units in the month. The closely watched single-family home component showed starts increased by a muted 0.5% to 89,200 units. Still, single-family housing starts have advanced for 10 straight months.
The mounting activity was in line with a strong rebound in sales and prices in the broader housing market, spurred by consumer confidence and low interest rates, after the market hit bottom during the global financial crisis.
Analysts expect the market has the legs to advance further this spring before the arrival of new mortgage rules in April and changes to provincial sales tax regimes in British Columbia and Ontario in July cool things down a bit.
“Housing starts continue to chase surging home sales, which appear to have a green light through the spring,” said Robert Kavcic, an economist at BMO Capital Markets. Along with the tax and mortgage rule changes to come, he said he expected interest rate hikes should temper demand.
Meantime, Canadian home-buying intentions for the next two years has risen to 10% from 7% two years ago, according to a home ownership survey by Royal Bank of Canada.
Six in 10 Canadians also believe home prices will increase this year, up from 25% in 2009, the survey found. Similarly, 64% think mortgage rates will be higher over the next year, up from 33 per cent a year ago.
The RBC study also found that 91% of homeowners believe a home is a good investment, the highest level in 12 years, while 26% expect their home to be their primary source of income when they retire.
Regionally, CMHC said Ontario led February’s gain in housing starts, jumping 28.6% from January, followed by a 14.3% advance in the Atlantic provinces. The Prairies rose 10.8%, while British Columbia was up 8%. Only Quebec saw a decline, with a 14.1% fall.
Rural starts were estimated at a seasonally adjusted annual rate of 17,600 units in February.
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Housing starts are expected to rise this year and next; prices will rise ‘modestly’ next year
Tavia Grant – Globe and Mail
Housing starts will strengthen this year and next, and that increase in supply should keep a lid on further house price increases, Canada’s national housing agency predicted Tuesday.
Starts subsided to 149,081 units last year, with activity picking up in the second half. This year, housing starts are expected to be between 152,000 and 189,300 units. And next year, that will climb to a 156,400-to-205,600 unit range.
As inventories build and pent-up demand eases after a flurry of sales in recent months, price pressure will also cool. CMHC expects average house prices to remain at current levels for the rest of this year and then rise modestly in 2011 due to “an improved balance between demand and supply.”
Average home prices were $328,537 in January, up 19.6% from one year ago, according to the Canadian Real Estate Association.
Canada’s existing home market has shifted from a buyers’ market, at the beginning of last year, to a sellers’ market. The lack of new listings for existing homes means demand has spilled over into the new home market. And that helps explain the forecast for higher housing starts activity this year.
The outlook comes as low borrowing costs spurred a flurry of buying activity in the past few months, pushing prices higher and sparking debate over housing bubbles. The federal government last month introduced new mortgage rules aimed at stopping people from taking on too much debt, and curbing speculators.
“Canadian housing markets will benefit from improving economic conditions and low mortgage rates,” said Bob Dugan, CMHC’s chief economist.
“As well, measures recently announced by the Government of Canada to support the long-term stability of Canada’s housing market will help moderate housing activity as some potential buyers will have to save a larger down payment or consider a less expensive home.”
Expectations of rising interest rates will also dampen demand.
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