The number of housing starts in Canada was 199,169 units in January, compared to 203,304 units in December, according to Canada Mortgage and Housing Corporation (CMHC) data published on Monday. "The overall decline is mostly attributable to a slowdown in the Prairies where the housing starts trend was at a 4-year low in January. The slowdown in new housing activity coincides with an unemployment rate that is at a 5-year high in Alberta," said Bob Dugan, CMHC Chief Economist. On the other hand, the total value of building permits issued in Canadian municipalities rose 11.3% to CA$6 billion in December, show the data by Statistic Canada (StatCan), also published on Monday. That follows a decline of 19.9% in November. The rise is mostly induced by a high number of the multi-family building plans in Quebec, Ontario, British Columbia and Alberta. Residential sector construction jumped 16.3% in December amounting to CA$4.7 billion, after a 17.9% decline in November. The statistics - smaller number of houses built vs. higher value of building permits - starts to paint a picture of a housing bubble. Low interest rates have helped push up housing prices and increased ratio of household debts, triggering market frenzy in the urban areas such as Toronto and Vancouver. Canadian central bank has noted the trend, and its representatives say it will not hike interest rates to rein in excessive household borrowing. "Interest rates affect all parts of the economy and are too blunt an instrument to address an imbalance in just one part of the economy - household credit. If you have a specific imbalance, you need a specific tool to address it," said Timothy Lane, deputy governor of the Bank of Canada. The Canadian media have already started reporting of a déjà vu from 1980s. "Jingle mail" is back - the phenomena of sending keys to bank as a way to walk out of mortgage. Moreover, other reports suggest that real estate agents use a technique of buying a property for themselves via "partnership" with a fictional buyer, only to resell the same property at a much higher price shortly after. Breaking the News / ZR
According to Canada Mortgage and Housing Corporation (CMHC), the recent decline in new house building projects, increases in housing permits, low interest rates pushing up house prices, and the increased ratio of household debts may signify an imminent housing bubble. The CMHC report also noted that mortgage lending has been on a downward trend for several years now, with only about half as many mortgages being originated each year compared to five or six years ago. Statistic Canada revealed an 11.3% rise ($6bn) in housing permits issued in Canadian municipalities in December 2015, following a 19.9% decline in November 2015, induced by increases in multi-family building plans in Quebec, Ontario, British Columbia and Alberta. The Canadian Central Bank refuses to increase interest rates to control excessive household borrowing. Meanwhile, the “jingle mail” phenomenon returns, where Canadians send keys back to banks in order to exit mortgages.