Condominium constructions in Canada has pushed the market to run its fastest pace since 2012 in September.
According to ctvnews.ca, Canada Mortgage and Housing Corp. said that "the seasonally adjusted annual rate of housing starts increased to 230,701 units in September. That was up from 214,255 units in August."
BMO senior economist Robert Kavcic said that house construction started from "simmer" and now a "rolling boil." He also said that "First, residential construction looks to be a bigger support than most expected in the second half of the year, which is good news on the growth front but second, we probably can't sustain this level of homebuilding activity for long before excess supply concerns start to build."
CMHC chief economist Bob Dugan said that the surge in the market is brought by new rental projects and boom in condominium constructions. He also said, "As a result, trend activity is now above the projected annual pace of around 190,000 new households. This underscores the continuing need for inventory management to minimize the number of completed but unsold units."
Though this surge is seen as a recovery of the housing market in their current economy, other analysts are seeing a potential hiccup the industry might face.
According to bloomberg.com, Canada Mortgage and Housing Corp. forecasts that the number of newly- built properties for this year will only reach around 190,000 units but the because of the surge last September, home construction has now exceeded this projection. Dugan also said that construction companies must "guard against a glut of properties they can't sell fast enough."
He also added that the need for "inventory management to minimize the number of completed but unsold units." Economists also said that there is a possibility of decline in the pace with 202,000 units compared to September's 230,701 units.
Krishen Rangasamy, senior economist at National Bank Financial in Montreal, said that moderation in housing starts will happen to in the next few months to push back the numbers to sustainable levels.
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