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October 2007

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Housing Starts Expected to Decline - October 30, 2007

Housing starts will reach 227,530 units in 2007, an increase of 0.1 per cent from the 227,395 units in 2006, according to Canada Mortgage and Housing Corporation’s (CMHC) fourth quarter Housing Market Outlook, Canada Edition report. However, in 2008, residential construction will decline to about 214,000 units. Despite this drop, 2008 will mark the seventh consecutive year in which housing starts exceed 200,000 units.

“Continuing high employment levels, income gains and low mortgage rates have been a boon to Canada’s housing markets. Despite this, however, housing starts are expected to decrease in 2008,” said Bob Dugan, Chief Economist at CMHC. “The pull back in housing starts next year will be mainly due to the increases in house prices in recent years, which have pushed mortgage carrying costs higher.”

Existing home sales, as measured by the Multiple Listing Service (MLS®)1, are poised to experience their best year on record with just over 521,000 units in 2007, a 7.8 per cent increase over 2006. The high level of MLS® sales will be led by activity in the Prairies. With respect to 2008, the level of MLS® sales will fall by 3.9 per cent, but will still be slightly over 500,000 units, the second highest on record. Growth in the average MLS® price will remain high at 10.1 per cent in 2007, mainly because of continued strong price pressures in Canada’s western provinces. As most resale markets move toward more balanced conditions, growth in average MLS® price is forecast to slow to 4.2 per cent in 2008.

Businesses concentrated in construction related industries should begin preparing for the downturn in demand for their services. Over the past decade, construction related industry has come to expect operating to full capacity as the norm given that demand has outpaced supply over this period. Those businesses that have been building good reputations, strong relationships and wide visibility through advertising will be the most likely to fair well during any downturn.

At the provincial level, British Columbia’s housing starts will remain above historical averages but are expected to decline slightly moving into 2008. A tight labour market, income growth, and high levels of consumer confidence will help to offset the dampening effect of rising mortgage carrying costs on the demand for new and existing homes in British Columbia. Housing starts should decline slightly from 36,443 units in 2006 to 36,200 units in 2007 and 33,250 units in 2008. The average MLS® price in British Columbia will grow by 12.1 per cent in 2007 and by 6.0 per cent in 2008 as increased listings and fewer resales bring more balanced supply and demand conditions for existing homes.

Alberta continues to experience low unemployment, an abundance of job opportunities, and continuing overall prosperity. Despite these positives, Alberta is expected to face a drop in net migrants between now and the end of 2008 due to the growing difference in provincial house prices and improved economic conditions in other provinces. With lower migration and higher mortgage carrying costs, housing starts will ease from 48,962 units in 2006 to 47,750 units in 2007 and 42,250 units in 2008. Following an unprecedented 30.7 per cent gain in 2006, the average MLS® price is expected to climb another 24.4 per cent in 2007 and 6.8 per cent in 2008.

Saskatchewan has been experiencing steady economic growth, a healthy employment situation and gains in net migration, all of which has contributed to strong housing demand. Total housing starts are forecast to reach about 6,000 units in 2007, the highest level in 24 years. However, escalating costs will push housing starts down to 5,500 units in 2008. The average MLS® price in Saskatchewan will rise by 28.7 per cent in 2007 while 2008 will see growth in prices of approximately 13.5 per cent.

Manitoba is one of five provinces whose economic growth is expected to exceed the national average. This success has contributed to a five-year high in job creation, thus increasing net migration to levels not seen since 1982. These factors will contribute to the high levels of new home construction expected between now and the end of 2008. Total housing starts will reach 5,750 units in 2007, the best performance in 20 years. Starts will edge lower to 5,600 units in 2008. The average MLS® price in Manitoba will rise by 11.8 per cent and 8.0 per cent in 2007 and 2008, respectively.

The Ontario economy is expected to improve slightly heading into 2008. Accordingly, this will help sustain a high level of housing demand across the province. New home construction activity will be moderate between now and the end of 2008. Housing starts are expected to decline from 73,417 units in 2006 to 67,700 units in 2007. For 2008, a slight up-tick to 68,175 units is expected. The average MLS® price in Ontario will rise by 6.2 per cent in 2007, while 2008 should see a more modest increase of 3.3 per cent.

Solid job creation and steady economic growth in Quebec, will cause housing starts to increase from 47,877 units in 2006 to 52,400 units in 2007. Looking ahead to 2008, starts are forecast to slide to 48,420. A buoyant resale market will also fuel average MLS® price growth in Quebec, by 6.8 per cent in 2007 and 3.3 per cent in 2008.

Positive labour market conditions in New Brunswick will help stem the net outflow of interprovincial migrants into 2008. Nevertheless, rising mortgage carrying costs and more choice in the resale market will result in lower levels of new home construction. Housing starts are forecast to decline from 4,085 units in 2006 to 4,025 units in 2007 and 3,725 units in 2008. The average MLS® price in New Brunswick should rise by 7.6 per cent and 3.7 per cent in 2007 and 2008, respectively.

As slower employment and population growth pervades Nova Scotia, new home construction activity is expected to be restrained between now and the end of 2008. Housing starts are forecast to stabilize from 4,896 units in 2006 to 4,700 units in 2007 and to 4,525 units in 2008. The average MLS® price in Nova Scotia is expected to rise by 7.5 per cent and 3.3 per cent in 2007 and 2008, respectively.

Prince Edward Island’s economy is expected to expand at a modest, but stable pace between now and the end of 2008 with employment growth in the range of one per cent per year. As a result, housing starts will slowly decline from 738 units in 2006 to 680 units in 2007 and 630 units in 2008. The average MLS® price in Prince Edward Island will rise by 5.6 per cent and 3.8 per cent in 2007 and 2008, respectively.

In Newfoundland, a strong economy will push housing demand up from 2,234 units in 2006 to 2,325 units in 2007. However, it is expected that higher homeownership and construction costs and lower employment growth will dampen housing demand past 2007. Housing starts for 2008 are forecast to fall by 3.2 per cent to 2,250 units. The average MLS® price in Newfoundland will rise by 6.1 per cent and 6.4 per cent in 2007 and 2008, respectively.

Will City Kids Ever Own Homes - October 23, 2007

According to a new study, in 2006, young adults in rural and small towns were more likely to be homeowners than young adults in Canada's three largest metropolitan areas. The study, published today in Canadian Social Trends, points to housing costs, which are much higher in Canada's largest metropolitan areas, as the main reason for this gap. The relative scarcity of rental housing in less populated areas may also be a factor, it said.

In Canada, 6 out of every 10 young people aged 25 to 39 in Canada who did not live with their parents owned their own home in 2006, according to the study, which was based on data from the 2006 General Social Survey (GSS). However, the proportion was highest (71%) among young people in this age group who lived in a rural area or in a small town.

In contrast, 54% of those living in the census metropolitan area of Vancouver and 53% of those living in Toronto owned their own home. The proportion fell to less than one-half (48%) among those living in Montréal. Overall, three-quarters of young adults aged 25 to 39 who no longer lived with their parents reported in the GSS that owning their own home was very important to them.

However, several factors in the last few years may have had a negative impact on home ownership for young people. These include rising housing prices, particularly in large urban centres, their desire to stay in school longer, and their decision to delay various milestones in life, such as marriage.

Income: A major determining factor

Despite the impact on home ownership rates of various factors relating to individuals themselves, it was household characteristics that mattered most to a person's chances of being a homeowner. Young adults were most likely to own their own home if they were married and had children, as well as if they had higher household incomes. The study found that household income is one of the factors, if not the single factor, with the biggest impact on the likelihood of owning a home.

Holding the other factors such as age, highest level of schooling, living arrangements and place of residence constant, the odds of being a homeowner were 1.7 times higher for young adults with a household income of over $100,000 than for those with an income between $50,000 and $80,000. This association is hardly surprising and reflects results of numerous earlier studies. Obviously, insufficient income represents the major obstacle to home ownership. This was quite apparent when it came to living in larger urban centres.

Just 22% of young adults reporting a household income of less than $30,000 per year were homeowners in 2006. On the other hand, 68% of those with a household income of $50,000 to $80,000 were homeowners, as were 82% of those with an income of $100,000 or more.

Location also made a significant difference. Two-fifths (40%) of young adults who had household incomes of under $30,000 a year but who lived in rural settings were homeowners. This was more than twice the proportion of only 16% among their counterparts who lived in one of Canada's six largest metropolitan areas.

Even for those young people with the highest household incomes ($80,000 or more a year), there was a difference, although not as great. The study found that 78% of these big city dwellers were homeowners, compared with 85% of those living in rural areas and small towns.

Home ownership rates vary with age, living arrangements, employment

The study found, not surprisingly, that home ownership rates increase directly with age, and are strongly associated with living arrangements and employment. Only 38% of young people aged between 25 and 27 owned their own homes in 2006. This proportion rose to 63% among individuals aged 31 to 33, and 73% among those aged 37 to 39. Even when all other factors that influence home ownership are held constant, the impact of age remains statistically significant. For example, the odds that people aged 37 to 39 would own their own home were 2.2 times higher than those for individuals aged 25 to 27.

Home ownership also varies strongly according to living arrangements. In 2006, 79% of married young adults who had children owned their own home. This proportion was only 40% among individuals living alone and 33% among lone parents.

GSS data show that even when the impact of income and other factors are held constant, young people with temporary jobs had 40% lower odds of owning their own home than people with permanent employment.

Few recent immigrants own their own home

GSS data show that the number of years spent in Canada since immigration is associated with the probability of being a homeowner. Almost two-thirds (64%) of young adults born in Canada and no longer living with their parents were homeowners.

However, this was true of less than half (48%) of their counterparts who had immigrated to Canada five to nine years prior to the survey, and of only 20% of immigrants who had arrived in Canada sometime in the five years preceding the 2006 GSS.

CMHC Releases Comprehensive Housing Report - October 22, 2007

Building greener homes in higher-density neighbourhoods near public transit, rather than in sprawling suburbs, is key to reducing the housing sector’s impact on the environment and lowering greenhouse gas emissions, according to the 2007 Canadian Housing Observer released today by Canada Mortgage and Housing Corporation (CMHC).

“The focus on sustainable housing in this year’s Canadian Housing Observer is particularly timely given growing public interest in the environment,” said Karen Kinsley, President of CMHC. “The Observer is a reliable source of current and comprehensive analysis of housing trends and conditions in Canada.”

The 2007 Canadian Housing Observer analyzes the relationship between environment-friendly housing construction, neighbourhood design and transportation. It found that downtown living, which provides easy access to workplaces, schools, and shops, as well as housing located close to public transit, lead to reduced automobile use. Also, better design of the suburbs results in less short-distance driving and lower greenhouse gas emissions.

The 2007 Canadian Housing Observer also examines recent trends in affordable housing, housing finance and market developments. A key conclusion about the living conditions of Canadians, which is based on new CMHC information, found that the level of Canadians living in core housing need1 has declined slightly from 13.9 per cent in 2002 to 13.6 per cent in 2004.

Other key findings of this year’s Canadian Housing Observer include:

• Housing-related spending grew by 6.1 per cent in 2006, contributing more than $275 billion to the Canadian economy;
• Total mortgage credit outstanding in 2006 reached an annual average of $694 billion, up 10.7 per cent from 2005. This is mainly due to increased property values, which in turn increased the average mortgage amount approved;
• Environment-friendly, energy-efficient housing is expected to become more the Canadian norm in the future thanks to initiatives such as CMHC’s EQuilibrium sustainable housing initiative.
• All of the fastest-growing metropolitan areas in recent years were in Alberta, Ontario and British Columbia, with the exceptions of Moncton, New Brunswick and Sherbrooke, Québec.

“At TD Economics we rely on CMHC’s Canadian Housing Observer for analysis and data to help us formulate answers. The 2007 edition is special because for the first time it gives data on housing conditions for between census years,” said Don Drummond, Chief Economist, TD Bank Financial Group.

This year’s print edition of the Canadian Housing Observer is complemented by a detailed array of online housing market and housing conditions data resources at CMHC's website. This includes CMHC’s Housing in Canada Online (HiCO), a powerful and free interactive tool that provides access to data on national, regional, local and off-reserve housing conditions, including core housing need.

Home and Gasoline Costs Push Up CPI - October 19, 2007

Owing largely to higher gasoline prices in September 2007 compared with low levels in September 2006, consumer prices rose by 2.5% during the same period. This was a sharp acceleration from the 1.7% increase posted in August. A Statistics Canada reports shows that excluding gasoline, consumer prices rose by a more moderate 2.0% between September 2006 and September 2007.

Prices at the pump were 12.7% higher in September than they were in September 2006. This was the fastest rate of growth since July 2006 and was due to a sharp drop in gasoline prices in September 2006. On a monthly basis, pump prices remained relatively stable between August and September this year, rising a moderate 0.8%.

Owned accommodation cost also pushed up the 12-month change in the CPI in September, rising 4.8%. Homeowner's replacement cost, which represents the worn-out structural portion of housing, and mortgage interest cost were the primary drivers of the increase in costs to Canadian homeowners.

Over time, mortgage interest cost has become an increasingly important driver of the overall change in owned accommodation. Between September 2006 and September 2007, mortgage interest cost rose by 6.4%, compared with 6.1% in August. This is the highest rate of growth since June 1991.

Homeowners' replacement costs were 5.2% higher in September than they were a year earlier. However, this component's contribution to owned accommodation has been tapering off.

Housing costs also accelerated, due to a 2.1% increase in the price of electricity and a 9.0% rise in the price of water.

Housing Prices Expected to Moderate in 2008 - October 17, 2007

After posting extraordinary gains in 2007, housing market performance will moderate in most major Canadian centres in 2008, according to a report released today by RE/MAX.

The RE/MAX Housing Market Outlook 2008 examined residential real estate trends in 18 markets across the country. The report found that while economic prospects will continue to improve next year, few major markets are expected to exceed record sales levels set in 2007. Winnipeg, Hamilton-Burlington, Kitchener-Waterloo, London-St. Thomas, Ottawa, Sudbury, Saint John, Halifax-Dartmouth, and St. John's are all predicted to buck the trend in 2008, with appreciation ranging from one to seven per cent. Average price is forecast to increase in 78 per cent of markets surveyed next year, with the lowest price increase expected in Edmonton and the highest in St. John's.

Nationally, the number of homes sold is expected to break through the half-million threshold in 2007, climbing 13 per cent to an estimated 545,400 units, up from 483,770 units one year ago. Average price is projected to appreciate nine per cent to $303,000, up about $25,000 over 2006 levels. In 2008, home sales are expected to retreat to 500,000 units while Canadian housing values are forecast to continue their ascent, rising six per cent to $321,000.

"Clearly, economic prosperity has translated into increased housing sales and upward pressure on prices across the board," says Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada. "The country's economic engine fired on all cylinders throughout the year, despite dire conditions south of the border. As in 2007, inventory will be the major wildcard next year - the ultimate variable most expected to influence housing market conditions and performance. A return to tight market conditions could mean all bets are off as buyers are forced to compete, creating increased market pressure."

Major market frontrunners for price appreciation in 2008 include St. John's (12 per cent), Regina and Kelowna - Central Okanagan (nine per cent), Hamilton- Burlington and Saint John (eight per cent) and Greater Vancouver (seven per cent). Leading the country in sales growth next year will be Kitchener-Waterloo (seven per cent), followed by Hamilton-Burlington, London-St. Thomas, Sudbury and Halifax-Dartmouth, each forecasting a five per cent gain.

Higher mortgage rates and increased inventory levels failed to materialize in most major centres, making 2007 a record year for real estate activity in Canada. By year-end, housing values across the country are expected to shatter existing records. Serious double-digit increases in average price are forecasted for Saskatoon (49), Edmonton (31.5), Regina (21), Calgary (20), Sudbury (20), Kelowna (19.5) Saint John (17), St. John's (12), and Greater Vancouver (10).

Saskatchewan dominated real estate news in 2007, reporting some of the highest percentage increases in unit sales. The number of homes sold in Regina by year-end is expected to top 35 per cent, bringing sales to an estimated 4,000 units. Neighbouring Saskatoon is forecast to climb 28 per cent to 4,400 units in 2007.

Other centres expected to post double-digit gains in activity include Saint John (19 per cent) Kitchener-Waterloo (13 per cent), Halifax-Dartmouth (12 per cent), St. John's (11 per cent), and Toronto (10 per cent).

"Western markets were first out of the gate in 2007, but those in the East followed suit," says Michael Polzler, Executive Vice President and Regional Director, RE/MAX Ontario-Atlantic Canada. "By year-end, some of the most impressive gains in home sales will be realized in Ontario and Atlantic Canada. Solid economic fundamentals, including billions of dollars in capital projects, a positive unemployment outlook, and solid consumer confidence levels will propel markets forward. A slow and steady growth trajectory, minus the peaks and valleys experienced in 2007, is forecast for next year."

BoC Leaves Target Interest Rate at 4.5 Per Cent - October 16, 2007

The Bank of Canada today announced that it is maintaining its target for the overnight rate at 4 1/2 per cent. The operating band for the overnight rate is unchanged, and the Bank Rate remains at 4 3/4 per cent.

Against a backdrop of robust global economic expansion and strong commodity prices, information received since the July Monetary Policy Report Update (MPRU) indicates that the Canadian economy is now operating further above its production potential than had been previously expected. The core rate of inflation, which has been above 2 per cent for the past year, was 2.2 per cent in August. Total consumer price inflation fell temporarily in August to 1.7 per cent, having been above the 2 per cent inflation target since the spring.

Since the July MPRU, the outlook for the U.S. economy has weakened because of greater-than-expected slowing in the housing sector. The Bank has revised down its projection for U.S. growth to 1.9 per cent in 2007 and 2.1 per cent in 2008. U.S. growth is expected to pick up to 3 per cent in 2009.

The Canadian dollar traded in a range of 93 to 95.5 cents U.S. in July and August, but since then it has appreciated sharply to as high as 1.03 dollars U.S. In the Bank's new base-case projection, the Canadian dollar is assumed to average 98 cents, the mid-point of the range since the July MPRU. As well, there has been a tightening of credit conditions stemming from the financial market developments this summer. For Canada, the Bank assumes that the cost of credit for firms and households relative to the overnight rate will be 25 basis points higher over the projection period than it was prior to the summer developments.

Despite these tighter credit conditions, momentum in domestic demand in Canada is expected to remain strong. The combined effect of a weaker U.S. outlook and a higher assumed level of the Canadian dollar implies, however, that net exports will exert a more significant drag on the economy in 2008 and 2009 than previously expected. As a result, the Canadian economy is projected to grow by 2.6 per cent in 2007, 2.3 per cent in 2008, and 2.5 per cent in 2009. This growth profile implies that aggregate supply and demand will move back into balance in early 2009. Both core and total CPI inflation are projected to return to 2 per cent in the second half of 2008. In line with this projection, the Bank judges, at this time, that the current level of the target for the overnight rate is consistent with achieving the inflation target over the medium term.

There are significant upside and downside risks to the Bank's inflation projection. On the upside, excess demand in the Canadian economy could persist longer than projected. This could come from two sources: higher growth in household spending than projected and lower growth in productivity than assumed. On the downside, if the Canadian dollar exchange rate were to persist above the 98 cent U.S. level assumed over the projection horizon for reasons not associated with stronger-than-projected demand for Canadian products, Canadian output and inflation would be lower. In addition, the effect of the past appreciation of the Canadian dollar on demand and inflation could be stronger than expected and the effect of the weakness in the U.S. housing sector could be greater than anticipated. All factors considered, the Bank judges that the risks to its inflation projection are roughly balanced, with perhaps a slight tilt to the downside.

Housing Starts Propel Leading Indicators- October 15, 2007

The composite leading index rose 0.4% in September, a slight improvement on its 0.3% gain in August according to a Statistics Canada report released this morning. More importantly, the index showed little or no effect from the turmoil in some parts of financial markets that began in mid-August. In particular, there were concerns that unsettled financial market conditions would affect output and employment, but strong gains in housing starts and jobs in September showed that these were unfounded.

Household demand remained the driving force behind growth. The housing index leapt by 5.3%, its largest gain in almost six years, due to higher housing starts. Spending on durable goods also accelerated. Strong consumer demand for services was the largest contributor to the growth of services employment.

Financial market conditions improved in September after slowing over the summer. The stock market rebounded 1% due to widespread gains.

The manufacturing sector remained mixed, with new orders rising, the average workweek declining and the ratio of shipments to inventories remaining unchanged for a second straight month.

The US leading indicator also was unchanged. Housing market conditions deteriorated late in the summer. Instead, exports and business investment took the lead in growth.

Bank Predicts Continuing Prosperity in Canada - Octber 15, 2007

The Canadian economy will outperform the U.S. economy in 2008, despite the loonie reaching a nearly a half-century high of $1.05 against the greenback, finds CIBC World Markets latest economic forecast.

"The loonie's flight is far from over," says Jeff Rubin, Chief Economist and Chief Strategist at CIBC World Markets. "By the end of next year, you'll get as much as a nickel back when you trade your loonies for greenbacks, the biggest premium since 1960."

The forecast finds that across a wide spectrum of assets, the tables have suddenly turned between the American and Canadian economies. Canadian real GDP
growth is outpacing the U.S.; American housing prices continue to fall on mounting foreclosures while Canadian housing prices continue to rise due to a surging economy; and the resource-based TSX is set to outperform the S&P 500 for the fourth straight year.

Rubin notes that in the past, weakness in the American economy would spill over the border in a hurry, particularly when a par Canadian dollar exchange rate left exporters fully exposed. But with the developing world, not the U.S., now driving global resource demand, the umbilical cord that has always connected the Canadian economy to the much larger American market is being severed. That's already becoming apparent with Canadian real GDP growth poised to surpass the U.S. in a year when the Canadian dollar appreciated from 85 cents to parity.

"Canadians are getting richer compared to their American neighbours, after having fallen so far behind during the IT-driven economy of the 1990s" says Rubin. "At the heart of this reversal of fortune is the huge shift in the global terms of trade over the last decade, which has seen economic value-added migrate from information technology back to resource rents under the ground.

"Nowhere is that shift more evident than when comparing soaring crude oil prices against stagnant or plunging technology prices. It takes only a third as many barrels of oil to buy a basic computer as it did at the start of the decade, when Silicon Valley drove the world economy."

The CIBC World Markets economic forecast finds that rising resource rents are continuing to swell corporate earnings, personal income and government tax revenue in Canada. It notes that with consumer spending, business investment and government spending all well financed, the domestic economy will be firing
on all cylinders.

The story in the U.S. economy is much different. Tumbling construction, business caution on inventories, and a consumer sector hit by credit concerns threaten to take GDP growth to near zero in the fourth quarter with not much better in the first quarter of 2008.

"A much stronger domestic economy north of the border will in turn translate into divergent monetary policies in the two countries with the Federal Reserve Board following through with another 50 basis points of easing while the Bank of Canada remains on the sidelines," adds Rubin. "With interest rate spreads turning against the greenback, and commodity prices buoyant, the Canadian dollar should climb to a five per cent premium against the U.S. dollar by the end of 2008."

The rising loonie and U.S. economic weakness is hurting Canada's manufacturing sector, but this part of the Canadian economy is becoming increasingly marginalized. The sector is approaching its lowest share of GDP in the post-war period. Both the auto and lumber sectors are feeling the full brunt of a U.S. economic slowdown, but the losses in manufacturing are being readily offset in today's economy.

The bank notes that the recent loss of almost 300,000 manufacturing jobs has been more than off-set by job creation in other sectors which has produced a three-decade low national unemployment rate. In fact, once measurement differences are accounted for, Canada's jobless rate will fall as low as the U.S. rate next year for the first time since 1982.

In the past five years, no industry has hired more workers or grown production faster than construction. In addition to heightened residential activity, Canada has witnessed a private and public sector investment boom. The former aims to capitalize on global growth opportunities, with the latter made possible by surging government revenues. Government stimulus is apparent in the labour market, with the public sector share of employment at a decade high.

The report finds that healthy budget surpluses indicate further government-related hiring may be ahead, although it notes that investments in social programs need to be balanced against other priorities. It also indicates that given years of progress on addressing the federal debt and with the fiscal imbalance largely addressed, the pace of federal debt reduction can now be scaled back and the time is ripe for meaningful tax relief.

BC Housing Starts Up 16 Per Cent - October 9, 2007

The seasonally adjusted annual rate of housing starts was 278,200 units in September, up 19.6 per cent from 232,700 units in August, according to Canada Mortgage and Housing Corporation (CMHC).

“The rise in September housing starts reflects a strong multiple starts segment,” said Bob Dugan, Chief Economist at CMHC’s Market Analysis Centre. “In particular, the robust results achieved this month can be mostly attributed to increased condominium starts, which reflect strong condo sales over the past 12 to 24 months. Despite this sizeable growth in September, we continue to expect that housing starts will decrease gradually between now and the end of 2008.”

The seasonally adjusted annual rate of urban starts increased 22.9 per cent to 244,400 in September, compared to August. Urban singles were down 4.3 per cent to 90,300 units in September, while multiple starts increased 47.5 per cent to 154,100 units.

In September, the seasonally adjusted annual rate of urban starts increased in all five regions. Urban starts registered an increase of 3.0 per cent in the Atlantic region, 46.0 per cent in Quebec, 23.6 per cent in Ontario, 11.1 per cent in the Prairies, and 15.8 per cent in British Columbia. Urban single starts were down in all regions except Quebec, where single starts were unchanged at 16,400 units. All regions saw double-digit increases in urban multiple starts with Quebec leading the way with a 75.2 per cent increase.

Rural starts were estimated at a seasonally adjusted annual rate of 33,800 units in September.

Actual starts, in rural and urban areas combined, were up an estimated 0.2 per cent in the first nine months of 2007 compared to the same period in 2006. In urban areas, actual total starts grew by an estimated 1.2 per cent year-to-date. Single starts growth was -4.7 per cent while multiple starts grew by approximately 7.0 per cent.

P. Eng. Should Soon Be Good in Australia - October 5, 2007

Engineers Canada signed a mutual recognition agreement with Engineers Australia during a ceremony held yesterday in Ottawa. The Agreement enhances the international mobility of professional engineers by streamlining mutual recognition of engineering qualifications and licensing arrangements to work on projects in both countries.

For Canadian professional engineers who desire to work in Australia, the Agreement allows Canada's professional engineering designation, the P.Eng., to be seen as equivalent to the Australian Chartered Professional Engineer designation, the CPEng. Likewise, the Agreement will allow Australian engineers to become licensed in Canadian jurisdictions, thus enhancing the immigration of internationally educated engineering graduates. Registration will also be facilitated through the terms of the Agreement.

"This agreement marks a significant event in both countries' engineering histories," said Marie Lemay, P.Eng., ing., Chief Executive Officer of Engineers Canada. "Like Engineers Canada, it is clear that Engineers Australia aims to achieve a high standard of excellence in the profession. The agreement signed today will advance opportunities of mobility for Canadian and Australian engineers, assist in overcoming skills shortages, and I am confident that it will also facilitate the increased sharing of knowledge and ideas between our two countries."

"The mutual recognition agreement is indicative of the strong relationship between our two countries", said Eric van der Wal, Australian Acting High Commissioner to Canada. "Agreements of this kind will assist engineers in both countries in broadening their experiences, and are a welcome contribution to the growing number of cooperation agreements between Canada and Australia. I congratulate Engineers Canada and Engineers Australia on taking the lead in this important area."

The Agreement has been developed due in part to financial support from the Government of Canada, through the Program for Export Market Development of the Department of Foreign Affairs and International Trade. It will take effect once it has been ratified by Engineers Canada's constituent members: the 12 provincial and territorial associations/ordre that regulate the practice of engineering in Canada.

Residential Building Intentions Down in West - October 4, 2007

The value of building permits issued across the country surpassed the $6-billion mark for the fourth consecutive month in August with strong performances in both residential and non-residential sectors according to a report filed this morning by Statistics Canada. Municipalities issued permits worth $6.3 billion, up 1.4% from $6.2 billion in July, pointing to a busy fall in the construction industry. The value of permits hit its highest level on record at $6.9 billion in both May and June.

Contrary to the situation in the United States, the residential sector remained clearly healthy in Canada. The value of housing permits was virtually unchanged from the previous month, but it was still a strong $3.9 billion. An increase in single-family permits offset a decline in the multiple-family component.

The comparison of non-seasonally adjusted data showed that municipalities authorized a total of 161,510 new dwellings between January and August 2007, up 2.5% from the same period in 2006. In the United States, during the same period, the number of privately-owned approved units plunged 24.9%.

In Canada's non-residential sector, municipalities issued $2.4 billion worth of building permits, up 4.3% from July. The value of institutional and commercial permits increased, while industrial permits fell 8.6%. Even so, industrial intentions remained above the monthly average so far this year.

Provincially, Ontario recorded the biggest increase in the total value of permits, but it was offset by a decline in Alberta. This left room for a gain in Saskatchewan to have an impact on the overall result.

Residential Sector

The value of single-family permits hit its second highest monthly level on record in August, offsetting a decline in intentions for multi-family dwellings. Contractors took out multi-family permits worth $1.4 billion in August, down 4.3%, the second consecutive monthly decline. Municipalities approved 10,334 multi-family units, a 9.1% decline. Even so, the demand for new multi-family dwellings remained 8.6% higher than the average monthly level in 2006.

On the other hand, the value of single-family permits rose 2.2% to $2.5 billion, slightly below the previous peak attained in June 2007. This gain was fuelled by a 3.7% increase in the number of units authorised. They reached 9,975, the highest number so far this year.

Several factors continued to have a positive impact on housing demand, including strength in employment, growth in disposable income, low inflation, tight apartment vacancy rates in several centres and attractive financing options.

Provincially, the largest decline (in dollars) occurred in British Columbia, where the value of housing permits fell 7.0% to $683 million, the result of a 13.6% decrease in multi-family permits.

Residential intentions in Alberta fell 4.1% to $808 million, the third monthly decline in the last four months. This came in the wake of a 22.4% decrease in multi-family housing, which was offset somewhat by a gain in single-family permits.

Despite the reduced pace in Alberta, the impact from the resource-based boom in the West was still present. For example, residential housing intentions for August in Saskatchewan remained virtually unchanged from July, thanks to a 12.1% increase in the value of single-family permits.

A decline in residential permits in Ontario was due to a substantial drop in multi-family permits, which was only partially offset by an increase in single-family housing.

On the other hand, strength in the multi-family component led to increases in the total values of residential permits in Quebec (+5.2% to $778 million), Nova Scotia (+32.8% to $99 million) and Newfoundland and Labrador (+74.9% to $59 million).

Non-residential sector

The 4.3% increase in non-residential permits in August extended an upward trend in the sector that has been continuing almost without interruption since the beginning of 2006.

The commercial component has had a big impact on the increase in non-residential permits. Municipalities issued $1.3 billion worth of commercial permits in August, up 9.9% from July. The gain followed two substantial declines in June (-16.6%) and July (-29.8%). These summertime intentions halted an upward trend in commercial permits that lasted throughout 2006 and the first half of 2007.

The increase in commercial permits came from a wide variety of buildings such as hotels, office buildings, shopping malls and warehouses. Furthermore, the three westernmost provinces accounted for more than 80% of the increase in commercial permits.

In the institutional sector, the value of permits hit $618 million in August, up 3.9% from July. This gain, the third over the last four months, was fuelled largely by projects for hospitals and nursing homes.

Gains in institutional intentions in Ontario, British Columbia and New Brunswick more than offset the declines in all other provinces.

In the industrial sector, the value of permits fell 8.6% to $462 million after a 24.3% gain in July. This decrease was not sufficient enough to reverse the upward trend recorded since March 2007 in the industrial intentions.

The decline in August came largely from lower construction intentions for manufacturing buildings in Ontario and Alberta.

The demand for office space in several centres, strong corporate profits, healthy retail and wholesale sectors and the dynamic economy in Western Canada are among the factors that continued to drive non-residential construction intentions.

Provincially, the largest increases in non-residential permits occurred in Ontario, Saskatchewan and British Columbia.

In Ontario, the gain was due solely to institutional permits. The value of permits in this category ($390 million) was at its highest level since August 2005, thanks to projects for hospitals and schools.

In Saskatchewan, the value of non-residential permits surpassed the $100-million mark for the second time in three months, as permits in the industrial and commercial sectors surged.

In British Columbia, non-residential intentions rose for the third time in the last four months, thanks to gains in all three components.

Quebec and Alberta posted the largest declines (in dollars) among the provinces in non-residential permits. In both provinces, the drop was due to marked declines in institutional permits.

Metropolitan areas

For the first eight months of 2007, the total value of building permits in Saskatoon totalled $456 million, which already surpassed the annual record of $421 million reached in 2006.

Toronto, Calgary and Vancouver showed the strongest year-to-date advances (in dollars) among the metropolitan areas in 2007, thanks to rises in both the residential and non-residential sectors. Windsor and Oshawa showed the largest declines.

In August, 18 out of the 34 metropolitan areas showed gains in the total value of building permits, with Edmonton, Québec and Saskatoon showing the largest increases (in dollars). Edmonton and Saskatoon each set a new monthly record in August.

Most BC Homeowners Plan to Renovate - October 3, 2007

Seventy per cent of BC's homeowners plan to renovate or make home improvements within the next two years and 58 per cent are planning to start their projects within the next 12 months, an RBC/Ipsos Reid survey shows.

According to RBC's 2007 Renovation Survey, B.C. homeowners expect to spend an average of $11,629 on their renovations and bathrooms (39 per cent) and kitchens (37 per cent) remain the most likely targets for makeovers. "I'm fairly certain British Columbians will continue to see dated kitchen and bathroom sinks being thrown out with the trash or the recycling for some time to come," noted Kevin Lutz, manager, Mortgage Specialists for B.C. "Renovation intentions are down in most parts of Canada, while they have actually increased here."

Some of the main interesting results of the survey were as follows

• Most likely to pay for renovations without any cash or savings (7%)
• Most likely to turn to a home improvement show for inspiration (28%)
  along with residents of the Prairies and Ontario
• Most likely, along with Saskatchewan and Manitoba, to use the
  internet for inspiration (25%)
• Most likely, along with Ontarians, to hire a contractor to perform
  home renovations (42%)
• Most likely, along with Ontarians, to renovate to make home easier to
  sell (13%)
• Most likely to cite the quality of the workmanship as the biggest
  renovation headache (14%)
• Most likely to sell their home and move if their home needed major
  renovations (25%)

These are some of the findings of an RBC poll conducted by Ipsos Reid between August 1st and August 7, 2007. The online survey is based on a randomly selected representative sample of 3853 adult Canadian homeowners, including 581 British Columbians. With a representative sample of this size for BC, the results are considered accurate to within +/- 4.07 percentage points, 19 times out of 20, of what they would have been had the entire adult population of B.C. been polled. These data were statistically weighted to ensure the sample's regional and age/sex composition reflects that of the actual Canadian population according to the 2001 Census data.

 

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