MNI DATA ANALYSIS:Canada Housing Price Growth Slows;Supply Up>

--January New Housing Price Index Flat M/M, +3.2% Y/Y

--January Building Permits +5.6% M/M.

By Yali N'Diaye

     OTTAWA (MNI) - Canada new house prices were unchanged in January, 

bringing down the 12-month growth rate to 3.2% from 3.3% in December, 

the smallest increase in a year, confirming a slowing trend that started 

in July 2017, data from Statistics Canada showed Thursday. 

     On the supply front, building permits rose 5.6% in January, 

following a 2.5% increase in December, indicative of a further pickup in 

construction activity in months ahead. 

     --PRICE SLOWDOWN CONTINUES 

     As the Bank of Canada continues to monitor the impact of its 

tightening policy on housing demand and prices, which it said Wednesday 

will "take some time to fully assess," it will likely welcome the 

cooling signs, especially as they are not pointing to any sudden 

collapse so far. 

     The new housing price index was unchanged for the second 

consecutive month in January, which had not occurred since December 

2014-January 2015. 

     Statistics Canada cited the tighter mortgage rules in effect since 

January as well as higher mortgage rates as likely contributors to the 

"limited price change in many of the surveyed housing markets." 

     On a 12-month basis, the 3.2% price gain confirmed the slowdown 

that started in July 2017, following a peak the prior month at 3.9%. 

     House only prices and land only prices were also flat on the month, 

with a 12-month gain of 3.3% for both categories. 

     The more comprehensive Teranet-National Bank National Composite 

House Price Index rose 0.3% in January. The index was up 8.7% 

year-over-year, marking the smallest 12-month rise since May 2016 and a 

seventh consecutive deceleration. 

     --TORONTO, VANCOUVER DIVERGENCE 

     While prices slowed in both Toronto and Vancouver on the month, the 

divergence remained evident on a 12-month basis. 

     According to Canada Mortgage and Housing Corporation's most recent 

Housing Market Assessment from January 30, there is "strong evidence of 

overvaluation" in both Toronto and Vancouver, which continue to be 

monitored by the BOC. 

     In January, prices edged down 0.1% in Toronto, the first decrease 

since July 2014, with builders citing market conditions and builders 

promotions such as cash rebates. 

     Prices were flat in Vancouver, the weakest performance since 

February 2017, after rising 0.2% in December. 

     On a 12-month basis, however, price growth accelerated to 9.0% in 

Vancouver, the highest rate since July 2007. 

     Conversely, prices rose 4.4% in Toronto, the smallest increase 

since January 2016, when it was also up 4.4%. 

     In Vancouver, permits were down 9.5%. 

     --TORONTO SUPPLY UP 

     Meanwhile, supply increased at the beginning of the year. 

     CMHC reported earlier Thursday that housing starts rose to a 

seasonally adjusted annual rate of 229,737 units in February, up from 

215,260 units in January, topping analysts' expectations. 

     Statistics Canada reported that permits increased for the second 

consecutive month in January, indicating more supply to come, with gains 

both in the residential (+5.9%) and non-residential (+5.0%) sectors. 

     Within the residential component, gains were led by multi-family 

dwellings (+14.2%), while construction intentions for single-family 

dwellings were down 1.3%. 

     Within the non-residential sector, permits fell 18.6% for 

industrial buildings, which was offset by a 19.2% gain in institutional 

buildings and an 8.9% increase for commercial buildings. 

     Overall, permits were up in 16 of 36 metropolitan areas, led by 

Toronto, where construction intentions rose 25.5%, the largest gain 

since August 2015. 

     In Vancouver, permits fell 9.5%. 

In February, "housing starts in Toronto CMA trended higher in February 

on the back of a record number of apartment starts," CMHC said Thursday.

--MNI Ottawa Bureau; email: yali.ndiaye@marketnews.com

[TOPICS: MACDS$,M$C$$$]