WRAPUP 2-Canada housing starts drop, mortgage sector to slow

* October starts down 9.2 pct at 167,900 units

* Mortgage market seen slowing

* Surveys find commercial real estate stable, rising
(Adds commercial real estate surveys)

TORONTO, Nov 8 (BestGrowthStock) – Canadian housing starts fell
9.2 percent in October, sliding to their lowest in more than a
year, data indicated on Monday, suggesting the slowing housing
market could become a drag on economic growth.

New home construction fell to a seasonally adjusted annual
rate of 167,900 units from a downwardly revised 185,000 units
in September, Canada Mortgage and Housing Corp said on Monday.

The number came up short of analyst forecasts for 183,000
starts. September starts were previously reported at 186,400
units on an annualized basis.

It was the fifth monthly decline in the six months since
new home construction came close to a two-year high in April,
and the lowest level of starts since September 2009.

“Canadian housing demand has cooled significantly this
year, and supply now appears to be following,” said Robert
Kavcic, an economist at BMO Capital Markets.

A powerful source of economic growth for much of the past
decade, the Canadian housing sector began to slow after the
recession and the cooling has accelerated in recent months.

Data shows that home sales have slowed, construction has
moderated and prices are showing signs of stabilizing after a
period of sharp increases.

The heated activity in all corners of the housing market
was a major reason that residential mortgage credit expanded
rapidly to top C$1 trillion as of August 2010, a separate
report showed on Monday.

The gain marked a 7.6 percent rise from the year before,
the Canadian Association of Accredited Mortgage Professionals
said of its annual mortgage survey. Data was collected from
various sources, including an online survey of 2,005 Canadians.
More than one-half of the sample were homeowners with
mortgages.

The association described growth over the past year as
“quite strong” and said coming years should bring slower, but
historically solid, growth, even with buying activity and
housing construction slowing.

It estimated the amount of outstanding residential mortgage
credit will rise by about 7 percent this year to C$1.028
trillion ($1.028 trillion), with growth easing to a 6.5 percent
pace in 2011, and close to 6 percent in 2012. That compares to
average growth rates of 10.7 percent a year between 2004 and
2008, when the housing market was booming.

The report also showed Canadian homeowners were comfortable
with their mortgage debt and believe they can handle an
increase in interest rates.

SINGLE-FAMILY HOMES

Starts of closely watched urban single-family homes
declined 8 percent in October to 57,700 units, while urban
multiples, such as condos, fell 15 percent to 84,700 units.

CMHC said the moderation in monthly housing starts from
“relatively high” levels earlier in the year was consistent
with its projection of 184,900 units this year. It estimates
about 175,000 units next year.

Regionally, starts were lower by a province-leading 24.5
percent in Ontario, followed by a 16.9 percent drop in the
Prairie region. Starts in British Columbia fell 9.1 percent and
were down 2.6 percent in Quebec. Atlantic Canada was the only
region to report an increase in new home construction in the
month, up 32.9 percent.

Rural starts were estimated at a seasonally adjusted annual
rate of 25,500 units in October.

COMMERCIAL REAL ESTATE

Canada’s commercial real estate market, meantime, is
perceived to be on a relatively stable trajectory in its
overall market conditions.

The REALpac/FPL Canadian Real Estate Sentiment Survey,
which surveys real estate players’ current and future outlooks,
found respondents felt “market conditions are a little better
than they were 12 months ago, and they think things are going
to be a little better 12 months from now.”

“Market conditions are not getting worse, but they’re not
really trending up.”

A separate survey, by Colliers International, indicated on
Monday that Canada’s largest institutional and private real
estate investors think that the market has reached rock bottom
and is on the verge of an upswing.

The survey found 89 percent of Canadian respondents said
they intend to invest at home, with Toronto topping the list of
the preferred investment destinations by 26 percent, followed
by 18 percent in Vancouver.
(Reporting by Ka Yan Ng; editing by Frank McGurty)

WRAPUP 2-Canada housing starts drop, mortgage sector to slow