Canada housing starts jump as Ontario, B.C. markets sizzle

By David Ljunggren
OTTAWA, March 8 (Reuters) - Canadian housing starts jumped
in February from January as hot Ontario and British Columbia
markets outpaced the energy-producing West, where a crude slump
has hit confidence, the national housing agency said on Tuesday.
A report from the Canadian Mortgage and Housing Corp showed
the seasonally adjusted annualized rate of housing starts rose
to 212,594 units in February from a downwardly revised 165,071
units in January. Forecasters had expected 180,000 starts.
Demand for condominiums is soaring in big cities like
Toronto and Vancouver, prompting some analysts to worry about a
potential bubble. At the same time, crude-producing provinces
like Alberta are in a slump.
"Housing starts are trending at a four-year low in the
Prairies, where low oil prices have weakened consumer
confidence," CMHC Chief Economist Bob Dugan said in a statement.
"At the same time, starts are trending at an eight-year high
in British Columbia, as new and resale home inventories remain
low," he added.
The Liberal government last December tried to cool the
hotter parts of the market, saying it would force people who
want to buy more expensive homes to provide a bigger down
payment.
BMO Capital Markets economist Robert Kavcic said the
national results masked the two-speed nature of the Canadian
housing market.
"On one end of the spectrum, residential construction
activity is in outright recession, while on the other, new
construction has flared well above past highs," he said in a
note to clients.
Kavcic noted that housing starts in British Columbia hit
their highest level since 1990 while Vancouver recorded the most
condominium starts on record.
"We've long been defenders of the Canadian housing market
against the rabid bears, but activity in Vancouver at least is
making that case a lot tougher to make," he said.
Separately, Canada's national statistics agency Statscan
said on Tuesday that the value of Canadian building permits
issued in January dropped by 9.8 percent from December, the
second sharp retreat in three months.
The fall exceeded the 2.5 percent decline forecast by
analysts in a Reuters poll.
A 21-percent decrease in construction intentions for
multi-family dwellings, concentrated in Ontario and British
Columbia, was the main reason for the weaker performance in
January. The overall value of permits issued in Alberta fell by
5.3 percent.