OTTAWA (Reuters) - Canadian housing starts inched higher in February from the previous month, and building permits rose in January as the long housing boom continued to defy expectations of a slowdown, separate reports showed on Wednesday.
Groundbreaking on new homes climbed to seasonally adjusted annual pace of 210,207 units from an upwardly revised 208,934 in January as robust activity in Ontario offset cooling in British Columbia, data from the Canada Mortgage and Housing Corp showed.
Economists had expected starts to decline to a 200,000 unit clip.
“Prices are telling builders to build, and that’s exactly what they’re doing,” CIBC Capital Markets economist Nick Exarhos wrote in a research note.
Even perennially sanguine economists have begun to call the Toronto market a bubble, with prices in Canada’s largest city posting double-digit annual increases month after month, well after analysts had expected the market to cool.
By contrast, the Vancouver market has slowed after the provincial government imposed a tax on foreign buyers last year to deter wealthy investors, mostly from mainland China, from driving up the price of homes.
The uptick in February housing starts pushed the six-month average to the highest level since the end of 2015, Exarhos said.
A 12.1 percent increase in single starts offset a 4.7 percent drop in multiples, typically condominiums and apartments.
A separate report from Statistics Canada showed the value of Canadian building permits rose by 5.4 percent in January from December. Analysts surveyed by Reuters had expected a 5.0 percent increase.
“An upturn in permit figures over the past several months suggest that momentum in building could continue for a few more months yet,” Exarhos said. “Chalk up another consensus-beating result for the Canadian housing market.”
The Canada Mortgage and Housing Corp said construction of new single-detached homes, typically the most expensive segment of the market, was reaching levels in Ontario, the nation’s most populous province, not seen since July 2008.
The federal government has taken repeated steps to cool the market and prevent homeowners from taking on too much debt, shortening the maximum length of a mortgage and requiring a larger down payment on the most expensive homes.
The building permits report showed increases for every component, particularly institutional buildings, and six provinces, led by Alberta, posted gains.
Additional reporting by David Ljunggren; Editing by Lisa Von Ahn