{"id":11118,"date":"2018-12-14T11:11:45","date_gmt":"2018-12-14T19:11:45","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=11118"},"modified":"2018-12-11T19:56:07","modified_gmt":"2018-12-12T03:56:07","slug":"canadas-new-construction-housing-market-could-be-hit-a-wall-thanks-to-higher-interest-rates","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2018\/12\/canadas-new-construction-housing-market-could-be-hit-a-wall-thanks-to-higher-interest-rates\/","title":{"rendered":"Higher Interest Rates Could Hit Canada&#8217;s New Construction Housing Market"},"content":{"rendered":"<p style=\"text-align: justify;\">There was a slight increase in Canadian housing starts in November, the second month of strong activity for the homebuilding sector. But according to economists, the solid performance could hit a wall in 2019.<\/p>\n<p style=\"text-align: justify;\">\u201cOn a trend basis, housing starts appear to have troughed, with some upward momentum of late,\u201d writes Fotios Raptis, a senior economist with TD, in his most recent note.<\/p>\n<p style=\"text-align: justify;\">Housing starts reflect the number of new homes that have started construction during a given month. They\u2019re an important indicator of both the health of the new homebuilding market, and a way to track the growth of new housing supply in the Canadian housing market.<\/p>\n<p style=\"text-align: justify;\">While housing starts won\u2019t decline in the new year, there\u2019s a good chance that they\u2019ll begin to plateau, writes Raptis. The reason? A series of policy measures introduced in 2018 that could prove to be major headwinds to the homebuilding sector.<\/p>\n<p style=\"text-align: justify;\">\u201cGoing forward, higher interest rates and affordability constraints in major [markets] (GTA, Greater Vancouver Area) could act to hold the pace of new residential construction,\u201d he writes.<\/p>\n<p style=\"text-align: justify;\">There\u2019s been a good deal of talk about what higher interest rates will mean for the Canadian housing market in the new year. The Bank of Canada hiked the overnight rate to 1.75 percent in October, and has indicated its intention to do so again in 2019. The higher rate environment could pose a challenge to new home builders, limiting the number of starts next quarter.<\/p>\n<p style=\"text-align: justify;\">Royce Mendes, a senior economist with CIBC, has also written about the potential impact of higher rates on the sector.<\/p>\n<p style=\"text-align: justify;\">\u201cFollowing a strong 2017, homebuilders are feeling the pinch of higher interest rates and tighter lending standards,\u201d he writes, in his most recent note.<\/p>\n<p style=\"text-align: justify;\">But both economists are quick to note that new construction starts will only plateau in the new year, and a serious dip in new construction homes is unlikely.<\/p>\n<p style=\"text-align: justify;\">\u201cA steep downturn in homebuilding nationwide appears unlikely,\u201d writes Raptis. \u201cCanada\u2019s population is on the rise, medium-term income growth should remain healthy, and most markets are generally not overbuilt.\u201d<\/p>\n<p style=\"text-align: justify;\"><a href=\"https:\/\/www.livabl.com\/2018\/12\/canadas-new-construction-housing-market-hit-wall-thanks-higher-interest-rates-td.html\">TD : Canada&#8217;s New Construction Housing Market Could Be Hit A Wall, Thanks to Higher Interest Rates<\/a> by Sarah Niedoba | Livabl<\/p>\n","protected":false},"excerpt":{"rendered":"<p>There was a slight increase in Canadian housing starts in November, the second month of strong activity for the homebuilding sector. But according to economists, the solid performance could hit &hellip; [<a href=\"https:\/\/www.roryc.ca\/blog\/2018\/12\/canadas-new-construction-housing-market-could-be-hit-a-wall-thanks-to-higher-interest-rates\/\">read more<\/a>]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[],"class_list":["post-11118","post","type-post","status-publish","format-standard","hentry","category-market-updates"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Higher Interest Rates Could Hit Canada&#039;s New Construction Housing Market &#8226; Rory C Real Estate | Oakwyn Realty<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.roryc.ca\/blog\/2018\/12\/canadas-new-construction-housing-market-could-be-hit-a-wall-thanks-to-higher-interest-rates\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Higher Interest Rates Could Hit Canada&#039;s New Construction Housing Market &#8226; Rory C Real Estate | Oakwyn Realty\" \/>\n<meta name=\"twitter:description\" content=\"There was a slight increase in Canadian housing starts in November, the second month of strong activity for the homebuilding sector. 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