By Andrea Hopkins
TORONTO, Sept 9 (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.
A separate report from Statistics Canada showed the value of
Canadian building permits issued in July fell less than expected
as a decline in construction intentions for non-residential
buildings was offset by a surge in plans for multi-family homes.
Building permits decreased 0.6 percent to C$7.74 billion
($5.85 billion), far short of economists' expectations for a
decline of 5.0 percent. June's figures were also revised up to
an increase of 15.5 percent.
Intentions for non-residential construction slumped 13.9
percent. But residential building permits jumped 8.7 percent as
contractors planned to build more multi-family dwellings, which
include apartment buildings and condominiums.