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Is The Entire Real Estate Market Under Threat?

--Residential Permits -1.7% M/M; Non-Residential +13.9% M/M
     By Yali N'Diaye 
     OTTAWA (MNI) - The value of permits issued by Canadian 
municipalities, an indicator of future construction activity, rose 3.8% 
to C$7.9 billion in September, partly recovering the 5.1% decline in 
August, Statistics Canada reported Wednesday. 
     The overall gain masked ongoing weakness in the residential sector, 
where construction intentions fell for the third consecutive month, 
posting a 1.7% decrease in September after declines of 2.5% in August 
and 2.1% in July. 
     Ontario posted the largest decrease in the residential sector 
(-7.9%), due to lower construction intentions for apartments. 
     Nationally, both single- and multi-family dwellings were down, by 
1.1% and 2.3%, respectively. 
     Overall gains in September owed to the strength of the 
non-residential sector, where building permits increased 13.9% after a 
9.5% decrease in August. 
     Much of the increase was explained by a high-value permit issued 
for a hospital in Alberta, the agency said, leading to a 30.0% surge to 
C$1.0 billion in the institutional component, the largest gain since 
October 2015, after a 12.9% drop in August. 
     Permits in Alberta were up 14.7% on the month, including a 65.4% 
surge in the non-residential sector. 
     Excluding Alberta, permits in the institutional component would be 
just C$0.7 billion, representing a 3.7% contraction from August. 
     Total permits excluding Alberta would be up 1.9%, half as much as 
the 3.8% headline figure. 
     For the third quarter, building permits rose a further 1.0%, 
following a 4.7% advance in the second quarter, supporting the scenario 
of a growth slowdown. 
     Residential permits contracted 0.3% in the third quarter after 
edging up 0.4% the previous quarter, and non-residential permits were up 
3.2% after a 13.1% increase. 
     Canada's housing agency said in its fourth quarter Housing Market 
Assessment that the housing market remained "at a high degree of 
vulnerability due to a combination of moderate price acceleration and 
overvaluation," especially Vancouver and Toronto areas. 
     On the building front, it pointed out overbuilding ramping up in 
Alberta and some parts of the East. 
     Despite lower residential permits for the past three months, Canada 
Mortgage and Housing Corporation reported Wednesday that housing starts 
increased to a seasonally adjusted annual rate of 222,271 in October 
from 219,293 in September. 
     "New home construction remains very strong in 2017, as the 
seasonally adjusted number of starts has been above 200,000 units in 
nine of ten months so far this year," CMHC said. 
     The trend edged up in October, although it was down in Toronto, 
especially for single-detached homes and apartments. Instead, it 
increased in Vancouver. 
 --MNI Ottawa Bureau; temail: