TORONTO (Reuters) - Canadian housing starts climbed more than expected in December, lifted mostly by multiple-unit buildings like condominiums, the latest sign that low interest and mortgage rates are keeping the country’s property market buoyant.
Housing starts rose to a seasonally adjusted annualized rate of 200,200 units, up from an upwardly revised 185,600 units a month earlier, Canada Mortgage and Housing Corp said on Tuesday.
The number of starts was well above the consensus expectation of analysts, who had called for 185,000 starts.
“The increase posted in December was mainly attributable to the multiple urban starts, particularly in Ontario and in Atlantic Canada”, Mathieu Laberge, deputy chief economist at CMHC’s Market Analysis Centre, said in a statement.
The seasonally adjusted annual rate of urban starts rose by 10.1 percent to 181,900 units. Multiple urban starts, the lion’s share of the broader rise, were up by 14.5 percent to 111,300 units in December, while urban single starts climbed by 3.8 percent to 70,600 units. Rural starts were estimated at 18,300.
But Mazen Issa, Canada Macro Strategist, at TD Securities said the outlook for the housing sector going forward was less optimistic.
“While we expect that an environment of low interest rates will prevent a pronounced drop in demand, the combination of overstretched household balance sheets, the impact of tighter mortgage regulations (including the potential for an additional tightening), and bruised confidence will nevertheless weigh,” he said in a note to clients.
Led by a moderation in multiple units, which have underpinned activity over the last two years, Issa forecast that starts will moderate to 181,000 units in 2012 and to 172,000 units in 2013.
Editing by Jeffrey Hodgson