Canadian housing start figures for October were released today. Below is the roundup of different bank commentary beginning with ATB’s Alberta focus.
ATB: Daily Economic Comment, November 8 2012
Despite the anxieties in Europe, uncertainty in the U.S., and a faltering economy in other parts of Canada, Alberta remains remarkably stable. The province’s balanced housing market has been one of the most convincing indicators of that. Construction got started on 33,127 new homes in Alberta last month (adjusted for seasonality). That is essentially unchanged from September. Over the first ten months of 2012, total housing starts are higher by 33 per cent over the same ten months of last year—a significant increase given the slowing of the housing market elsewhere in the country.
Nationally, housing starts slipped to 204,107 units, down from 223,995 in September—lower than the consensus forecast of 213,000. However, Alberta’s housing market has held up better than most other provinces. The number of starts in October is only slightly below the 10-year average for the province (34,800). And if you omit 2006 and 2007 from the calculation—the two record-setting years for
housing starts—last month’s figure is actually higher than average (31,300).
A strong labour market, high average wages, and surging consumer sentiment have helped keep Alberta’s housing market on its feet. But almostmost importantly, the province is once again a strong attractor of inter-provincial migrants—many of them moving to Alberta to find work. On a net basis, over 20,200 people from other provinces have moved to Wild Rose Country over the firsthalf of 2012. That alone provides some strong incentive for home builders to keep swinging their hammers.
BMO: Canadian Homebuilding Simmering Down
Regionally, the weakness was broad based as well, with fully 9 of 10 provinces recording declines in October. Nova Scotia was the lone survivor, as housing market trends remain relatively firm amid optimism over the shipbuilding contract—starts over the past year have run at the highest level in more than 5 years. Meantime, Ontario and Quebec posted the chunkiest unit declines, with activity in both provinces now down 9-10% y/y. (Read entire research note)
TD: Momentum continues to wane for homebuilders
It was simply a matter of time before homebuilders took their cue from the cooling nature of the resale housing market and underlying economic and demographic trends. The last few months of data suggest that momentum in new home construction is beginning to wane.
While there is much concern about the number of multiple projects underway, housing construction slowdowns are rarely confined to one particular property type. That being said, not everyone feels the same impact. Given the pace of construction and the growing concerns of supply-demand mismatch, the condo market is particularly vulnerable to the slowdown in store. (Read entire research note)
Condos have been the marginal driver of Canadian housing starts for some time now (see charts) and we see risk from that channel moving forward (more to come…)