Tag Archives: Gross Domestic Product
Canada Consumer Confidence Rises on Real Estate
Canadian consumer confidence rose for the first time in three months in December as homeowners became more certain about the value of their properties, according to a Nanos Research poll.
The Nanos Economic Mood Index — an aggregate of survey responses on the outlook for the economy, job security, personal finances and real estate — rose to 101.9 in December from 101.0 a month earlier. The index averaged 101.7 over the past six months, compared with 105.8 in the first half of 2012, as the country’s economy stalled.
Data released this month suggest tepid growth for the world’s 11th largest economy in the fourth-quarter. Canada recorded inflation of 0.8 percent in November, the slowest in more than three years, while gross domestic product rose 0.1 percent in October after stalling a month earlier.
Measures calculating optimism about housing prices rose to the highest since June, according to today’s Nanos poll. The balance of opinion between those who say they expect real estate values to increase in their neighborhood and those who believe they won’t rose to 20.6 in December from 17.1 in November.
The balance of opinion between those who say the economy will be stronger in the next six months relative to those who believe it will be weaker fell to 2.1 in December from 2.8.
Measures calculating personal finances and employment showed little change from levels that are the worst since the first half of the year. The balance of opinion between those who say their jobs are secure and those who believe they are not rose to 30.6 in December from 29.7 in November, while net perceptions on personal finances fell to –16.3 from –16.1.
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Contact the Jeffrey Team for more information – 416−388−1960
Laurin & Natalie Jeffrey are Toronto Realtors with Century 21 Regal Realty.
They did not write these articles, they just reproduce them here for people
who are interested in Toronto real estate. They do not work for any builders.
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Toronto and Canada Housing Forecasts Getting Rosier
Each month, our local home builders’ association receives several market intelligence reports from the Canadian Home Builders’ Association. This month’s newsletter contained a number of items that I thought would be of interest to new-home buyers in the GTA.
Economic Update
Dr. Peter Andersen, CHBA’s consulting economist, notes that this year will be much busier than expected for construction activity of all types. Housing starts have surged and residential construction has picked-up again. Non-residential construction, always a second-half cyclical performer, is in a solid expansion. A strong office leasing market and a declining office vacancy rate are signaling the onset of an office tower construction cycle.
Housing starts averaged 248,000 at annual rates in the first quarter – an increase of 17% from the same period a year earlier. This is far above the 2005 housing starts total of 225,481 units and also the annual cyclical peak of 233,431 units set in 2004.
The March starts figures were striking – 252,300 at seasonally adjusted annual rates. The first-quarter surge reflected both single-detached and multiple-unit starts. Housing start forecasts for 2006 are being revised upwards as a result of the monthly performance through the first three months of the year.
The resale market is always a good indicator for new-home demand. It is still hot and shows no sign yet of affordability stress. First-quarter sales were at an all-time record high, after adjusting for seasonality. Sales of existing homes and condos in March continued at close to record levels. This is also good news for renovation demand as the stimulus to renovation from resale housing activity, which works with a lag, shows no sign of slowing down. The national average resale price in March in major markets was up by 11.5% year over year.
RBC affordability index
High home prices and utility costs in the last three months of 2005 pushed home affordability to its highest level in 10 years, according to the Royal Bank of Canada.
RBC’s affordability index measures the proportion of pre-tax household income it takes to service the costs of owning a home. Despite the fact that incomes continue to rise, this increase does not match the hikes in mortgage rates, house prices and utility costs.
Income growth in Canada is starting to accelerate, wages are rising, but the increase in house prices has been faster. Add to it higher interest rates and overall size of rising mortgages, so affordability is going down.
Vancouver and Calgary were hit the hardest as housing prices soared in the last quarter of 2005. Affordability is expected to get worse in the first half of this year, but should level off by year’s end.
Labour shortage
The construction industry is concerned after hundreds of construction workers from Portugal and other countries have been deported as the new Conservative government moved away from Liberal government promises of an amnesty plan.
Promises of an amnesty gave hope to underground workers who came forward to file refugee claims as a result. Their attempts to stay in the country legally ended up getting many of them deported. Canada’s current immigration system is tailored to educated immigrants, and blue-collar workers often do not qualify.
“This is insanity,” says immigration lawyer Lorne Waldman. “We have an immigration system that is supposed to supply workers for jobs, but these blue-collar workers who are needed cannot qualify to get in.”
There is a major labour shortage in the construction industry – an industry that accounts for 9.5% of Canada’s total gross domestic product and 7.5% of Ontario’s alone. It is estimated that there are between 10,000 and 15,000 illegal immigrants working in southern Ontario’s construction and hospitality industries, and 200,000 undocumented workers across the country. Deportations are therefore a major threat to the construction industry.
The Canadian Home Builders’ Association wrote a letter to Immigration Minister Monte Solberg, supporting the work foreign workers do in the homebuilding industry and urging him to resolve the labour shortage.
Solberg says the government is working with the provinces to ensure labour needs are met. “We understand the process doesn’t work well for a lot of people. We’re trying to fix that. The ideal situation is for people to go through the process.” He ruled out an amnesty, he said, because he doesn’t want to encourage people to come to Canada illegally.
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Contact the Jeffrey Team for more information – 416-388-1960
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Canada December Housing Starts Rise to 174,500 Units
By Greg Quinn – Bloomberg
Canadian housing starts increased to the highest level in 14 months in December because of increased single and multiple-family homes, Canada Mortgage and Housing Corp. said.
Starts rose to a seasonally adjusted annual pace of 174,500 last month compared with 164,800 units in November, the third monthly gain, the Ottawa-based housing agency said today. Economists had forecast a 160,300-unit pace, according to the median of 18 responses in a Bloomberg survey.
Cheaper borrowing costs have sparked growing demand for Canadian homes, helping the country’s economy recover from its first recession in 17 years. The Bank of Canada has pledged to leave its benchmark rate at a record low of 0.25% through June unless the inflation outlook shifts.
“New home construction is going vertical and will be a sharp positive contribution to fourth-quarter real gross domestic product,” Derek Holt, economist at Scotia Capital in Toronto, said in an e-mailed note to clients.
Work on urban single-family homes rose 6.4% to 79,400 units in December, while multiple-dwelling starts rose 6.7% to 77,700 units from 72,800 units in November, the housing agency said.
Building Permits
In a separate report today, Statistics Canada said building permits fell 4.6% in November led by non-residential projects, particularly in Toronto and Calgary, while housing permits continued to grow.
The total value of permits issued by municipalities fell to $5.94 billion ($5.78 billion), Statistics Canada said in Ottawa. Permits for non-residential construction dropped 22% to $2.14 billion, and residential permits rose 9.1% to $3.79 billion, the fourth straight gain.
The decline follows a revised 20% increase in October to a 13-month high, as builders took advantage of the lowest mortgage rates in half a century. Bank of Canada Governor Mark Carney has said consumers should be cautious about taking on too much debt, and the bank’s adviser David Wolf is scheduled to give a speech at about 2 p.m. New York time on housing and the recovery.
Stimulus
“No other sector of the economy has been as highly affected by economic stimulus as housing,” said Phil Soper, president of Brookfield Real Estate Services Fund, in a Jan. 7 report.
The Bank of Canada cut its key lending rate to a record low 0.25% in April and Prime Minister Stephen Harper has offered temporary tax credits for home renovations.
Home construction has responded to the stimulus, with permits growing 38% over the 12 months ending in November. Non-residential permits have increased just 3.4% in that time.
Single-family home permits rose for a ninth month, by 2.9% to $2.5 billion, Statistics Canada said. Multiple- family permits rose 23% to $1.3 billion.
In November, permits for industrial projects plunged 58% and institutional permits dropped 26%, while commercial permits rose 3.9%.
By city, permits in Toronto fell 8.9% to $963 million, and dropped 47% in Calgary to $312 million. Vancouver had one of the biggest urban gains, with permits jumping 40% to $484 million.
Economists predicted a 3.3% drop in building permits based on the median of 12 estimates taken by Bloomberg News.
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Contact the Jeffrey Team for more information - 416-388-1960
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