What the analysts are saying: housing starts and home prices

A roundup of expert opinions—in a nutshell

To recap:

  • Housing Starts: December housing starts, the Canada Mortgage and Housing Corporation said yesterday, dipped by a moderate 1.7 per cent to 197,000 units on an annual basis, down from 201,376 in November but still slightly above the consensus forecast of 195,000. Seasonally adjusted annual rates of construction in urban centers were down across Canada, except Ontario, which bucked the trend with a 33.4 per cent increase.
  • New-house price index: Statistics Canada’s measure of price trends for new homes recorded a 0.1 per cent month-over-month increase in November after a similarly flat reading in October.

What the analysts are saying:

  • BMO’s Robert Kavcic notes that 2012 is a story of “two halves:” the first half of the year saw construction of new homes surge past 230,000 between April and July, the second half a much more muted picture. The watershed were stricter mortgage rules introduced by the government on July 9. This year, he predicts, will probably look like the second half of 2012.
  • According to TD’s Diana Petramala the market is still the defying the laws of gravity when it comes to construction rates. A sustainable rate is more like 180-190K a month on an annual basis. She’s particularly concerned about the condo market in Toronto, where builders continue to build despite weak demand and price growth.
  • For 2012 as a whole, writes RBC’s David Onyett-Jeffries, housing starts clocked in at 215,000 units, up 11 per cent from 2011. He forecasts 185,000 this year and 175,000 in 2014.
  • At an RBC conference in Toronto, Canada’s top bankers unanimously talked about “soft landing” and “small correction.” Even in the condo sector.
  • Royal LePage expects house prices to rise one per cent nationally next year.
  • M Hanson Advisers’s Ben Rabidoux has an, admittedly not new but still rather useful, explanation of the methodology of StatsCan’s new-house price index, which quality-adjusts prices.


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