Canadian housing starts rose unexpectedly in November and building permits surged in October, fuelling Canada's prolonged housing boom even as the nation's weak economy contributed to underlying softness in some regions, reports showed on Tuesday. Groundbreaking on new homes jumped to 211,916 units last month from a downwardly revised 197,712 units in October, bucking expectations for a softening to 197,300 starts, a report from the Canadian Mortgage and Housing Corp showed.
The continued strength in homebuilding was concentrated in condo building and in two regions - Ontario and the Prairies - and left economists wondering at a patchy housing boom that was not expected to last as long as it has. "The strength in Canadian housing construction this year has been somewhat of a mystery," Derek Holt, vice president of Scotiabank Economics, said in a note to clients.
The Bank of Canada has cut rates twice this year to help bolster the economy against slumping oil prices. Robert Kavcic, senior economist at BMO Capital Markets, noted a surge in starts in the energy heartland of the Prairie provinces - Alberta, Saskatchewan and Manitoba - which has been hard-hit by the long slump in oil prices. "Regionally, the Prairies were curiously strong in November, led by a hefty gain in Alberta," he said in a research note.
Canada's housing market has been growing since 2009, despite a tepid economy. While analysts have long warned the market is at risk of a correction and some have predicted a crash, most believe a soft landing will happen eventually. The Bank of Canada has kept official interest rates at historic lows for years in a bid to stimulate the economy, leaving federal government policymakers mulling tighter mortgage lending regulations to deal with the housing boom.
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