Daily Market Update

​Building permit applications increase but mainly for non-residential… Experts say more data is needed to make accurate predictions for the market… And investment manager says we are in a bubble.

Daily Market Update
Building permits increase
New figures from Statistics Canada show that contractors took out building permits worth $8.0 billion in June, up 13.5% from May. The June increase was mainly due to higher construction intentions for institutional and industrial buildings in Quebec and commercial buildings in Alberta. In the residential sector, the value of permits edged up 0.4% to $4.2 billion, a fourth consecutive monthly increase. Construction intentions for multi-family units fell 6.0% to $1.7 billion in June. This decline came in the wake of three straight monthly increases and was mainly due to lower construction intentions in Western Canada. Conversely, Ontario, Nova Scotia and Quebec posted gains. Nationally there was a drop in the number of permits issued for multi-family dwellings while the demand for single-family homes increased.
Experts need more data – but who’s going to supply it?
A lack of data is making it difficult for experts to predict what may happen with the Canadian property market. While some analysts have been predicting a correction in the market for some time, so far it hasn’t happened. Official data only tells part of the story and to make realistic and accurate predictions experts are calling for information such as the level of mortgage debt to household income and stats on high-risk loans. There are concerns that data from official sources is often from those with a remit to put a healthy slant on figures and also that the releases come many weeks after the fact. Although the CMHC is now issuing more data, StatsCan is cutting back and banks and other institutions often keep the information for themselves. The consensus among experts is that we need more detailed data about more aspects of the economy and housing market; but who’s going to supply it? Read the full story.
Investment chief says we’re in a “significant housing bubble”
A Toronto-based investment expert says we are in a housing bubble and is predicting a sharp correction. James Hodgkins, chief investment officer at CHS Asset Management says that if and when rates end up in a more normal range of say 3 or 4 per cent property will be 50 per cent overvalued on a price-to-rent ratio. He says that banks are overstretched because of valuations but also due to consumer leverage being stretched. Read the full story.