Canadian housing starts jump as Toronto condo building booms
By Andrea Hopkins
TORONTO (Reuters) - Canadian housing starts unexpectedly jumped in August from July as condo building surged to meet demand for lower-cost options in the nation's hottest market, extending a housing boom that is one of the few bright spots in Canada's otherwise tepid economy.
Wednesday's report from the Canadian Mortgage and Housing Corp showed the seasonally adjusted annualized rate of housing starts jumped to 216,924 in August from an upwardly revised 193,253 units in July. Forecasters had expected 190,000 starts.
Canada's housing market continues to defy expectations for a slowdown, despite broader economic weakness and low oil prices, with strong demand in Toronto offsetting a softer market in oil-dependent Calgary. Historically low borrowing costs have helped extend the boom.
"(This is) the strongest level for housing starts since September 2012, and comes entirely on the back of a jump in new condo starts in Toronto," BMO Capital Markets senior economist Robert Kavcic said in a research note.
Canada's largest market had seen a cooling in condominium building in 2014 amid fears of a looming correction, but home prices and sales have barely paused since 2009 and analysts are divided over whether the boom will end with a crash or a soft landing.
The Canadian economy saw a mild recession in the first half of the year, but economists and policymakers expect growth will resume in the third quarter.
CMHC Chief Economist Bob Dugan said the strong condo activity in Toronto comes amid a shift in demand from higher-priced single detached homes towards lower-priced alternatives. And while Toronto is hot, other markets are cooling.
"While national starts have increased, housing construction has started to slow in Alberta and Saskatchewan as a result of weakening economic conditions related to the decline of oil prices," Dugan said in the report. Continued...