Tag Archives: Canadian house prices
Home construction rose unexpectedly in March, led by Ontario and Quebec, Canada Mortgage and Housing Corporation said Wednesday.
There were 154,700 housing starts on an annualized basis during the month, up from a revised 136,100 units in February, the government agency said.
Many economists had expected housing starts to dip to 130,000 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.”
Urban housing starts were up 17% to 127,900 units in March, the agency said. Urban multiple starts rose 28.3% to 81,500 and urban single starts were 1.3% higher at 46,400.
Construction of urban units rose by an annualized 35% in Ontario and 23.3% in Quebec. Meanwhile, urban activity fell 17.3% in British Columbia, 7.9% in Atlantic Canada and by 7.5% in the Prairies.
Rural starts were flat at 26,800 units in March.
“New home construction is now at a more sustainable level after having been exceptionally strong over the past seven years, exceeding 200,000 units per year,” CMHC said.
Millan Mulraine, economics strategist at TD Securities, said the report “suggests that new housing starts activity pickup aggressively in March after six consecutive monthly declines.”
“However, in the grand scheme of things, the key economic fundamental factors continue to point to further weakness in Canadian housing sector activity, and as such we believe that this surprising pickup in construction activity is likely to be a one-month wonder, and expect activity to soften in the coming months,” he said.
The CMHC report comes a day after TD Economic forecast average Canadian house prices to fall to about $246,000 in 2009 – down 24% from the peak of $324,000 in 2007 – while overbuilding in the residential market, particularly in the Prairies, should prevent the sector from making a quick recovery from the current downturn in sales, prices and construction.
Comment: Take note, those are national prices, not Toronto prices. It is not unexpected to see, as the Western Provinces are taking a nasty hit in their respective real estate markets. It was Ontario that led the increase in housing starts above, keep that in mind.
“A glut in the housing stock means that builders will have to rein in residential construction further – particularly in the most overbuilt markets. As well, excess inventories in certain markets will prove an additional drag on home prices,” it said.
The TD report said house prices have been overshooting their fundamental value by about 9% since 2005 as speculation drove up prices and encouraged overbuilding.
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