Canada reports square off over housing bubble risk

TORONTO (Reuters) - Housing starts in Canada should rise moderately this year, the federal housing agency said on Tuesday, while two research groups published reports to revive talk of a housing bubble but arrived at different conclusions.

Canada Mortgage and Housing Corp (CMHC) said in its outlook that it expects housing starts of 184,900 units in 2010, slightly ahead of its May outlook for 182,000 units.

There were 149,081 starts in 2009.

For 2011, CMHC forecasts 176,900 starts, down slightly from the 179,600 it forecast in May.

For the existing-home market, CMHC chief economist Bob Dugan forecast 450,000 to 485,700 resales in 2010, with a specific prediction of 463,800. For 2011, he sees 425,000 to 490,700 resales, with a specific forecast of 456,000.

CMHC did not provide a forecast for an average price but said it would "edge lower" through the end of this year then rise modestly in 2011.

The CMHC forecast follows data earlier this month that showed housing starts fell for a third straight month in July, while sales of existing homes fell 6.8 percent in the same month, offering further evidence the recently hot housing sector is no longer playing a starring role in the economic recovery.

The recent data, which followed the implementation of stricter lending rules and higher interest rates, has deflated talk of a housing market bubble.

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