Tara Deschamps, The Canadian Press
Published Tuesday, September 28, 2021 11:18AM EDT
Last Updated Tuesday, September 28, 2021 11:18AM EDT
TORONTO — Canada Mortgage and Housing Corp. says the country’s housing sector moved from a moderate to high degree of vulnerability during the second quarter, with Toronto, Ottawa and Montreal among the markets shouldering the most risks.
The federal housing agency attributed the escalation in vulnerability to price acceleration and overvaluations across the country and said the shift was largely a reflection of intensified and persistent imbalances in several local housing markets across Ontario and Eastern Canada.
“Even though we’ve seen a little bit of a moderation in some of the housing market statistics in the third quarter, when looking at the second quarter results … activity was still much stronger than even it is today,” said Bob Duggan, CMHC’s chief economist.
“Housing market activity is very strong, price growth is still very strong and price levels are very high.”
Duggan and CMHC’s quarterly assessment released Tuesday assigns low, moderate or high vulnerability ratings to the entire country and 15 major cities based on four factors — overheating, price acceleration, overvaluation and excess inventories.
If those factors become imbalanced or risks increase in several areas at once, the agency posits that markets could be more vulnerable to troubles and people could begin struggling with their mortgages.
CMHC’s second-quarter assessment of the Canadian market found moderate degrees of vulnerability, when it examined the country’s risks of overheating, price acceleration and overvaluation.
It found a low level of vulnerability linked to the country’s excess inventories rate, but still gave the country a “high” vulnerability ranking overall.
In the two prior quarters, Canada’s housing market landed a “moderate” degree of vulnerability, but Duggan warned of pressure from rural areas like Ontario’s cottage country and the Niagara, Bancroft and North Bay regions, which don’t receive vulnerability ratings but contribute to the national analysis.
“A lot of the movement of people has been from some of the major urban centres to outside the major urban centres and some of the strongest price growth earlier this year was really experienced in smaller … and rural communities,” Duggan said Tuesday.
CMHC’s individual market assessments for the second quarter showed Toronto, Hamilton, Ottawa, Montreal, Moncton and Halifax have high degrees of vulnerability.
All of those markets were ranked high in the prior quarter, except for Montreal, which was previously assessed as moderate and is seeing overvaluation becoming a more pressing issue.
CMHC kept Victoria, Edmonton and Calgary at the moderate level they were at before, while Vancouver, Saskatoon, Regina, Winnipeg and Quebec City were assessed as having low degrees of vulnerability.
The low ranking was new for Vancouver, which was previously said to have a moderate vulnerability level.
This report by The Canadian Press was first published Sept. 28, 2021.
Bitcoin hovers near 6-month high on ETF hopes, inflation worries
Bitcoin hovered near a six-month high early on Monday on hopes that U.S. regulators would soon allow cryptocurrency exchange-traded funds (ETF) to trade, while global inflation worries also provided some support.
Bitcoin last stood at $62,359, near Friday’s six-month high of $62,944 and not far from its all-time high of $64,895 hit in April.
The U.S. Securities and Exchange Commission (SEC) is set to allow the first American bitcoin futures ETF to begin trading this week, Bloomberg News reported on Thursday, a move likely to lead to wider investment in digital assets.
Cryptocurrency players expect the approval of the first U.S. bitcoin ETF to trigger an influx of money from institutional players who cannot invest in digital coins at the moment.
Rising inflation worries also increased appetite for bitcoin, which is in limited supply, in contrast to the ample amount of currencies issued by central banks in recent years as monetary authorities printed money to stimulate their economies.
But some analysts noted that, after the recent rally, investors may sell bitcoin on the ETF news.
“The news of a suite of futures-tracking ETFs is not new to those following the space closely, and to many this is a step forward but not the game-changer that some are sensing,” said Chris Weston, head of research at Pepperstone in Melbourne, Australia.
“We’ve been excited by a spot ETF before, and this may need more work on the regulation front.”
(Reporting by Hideyuki Sano in Tokyo and Tom Westbrook in Singapore; Editing by Ana Nicolaci da Costa)
China’s plunging construction starts reminiscent of 2015 downturn
China’s September new construction starts slumped for a sixth straight month, the longest spate of monthly declines since 2015, as cash-strapped developers put a pause on projects in the wake of tighter regulations on borrowing.
New construction starts in September fell 13.54% from a year earlier, the third month of double-digit declines, according to Reuters calculations based on January-September data released by the National Bureau of Statistics on Monday.
That marks the longest downtrend since declines in March-August 2015, the last property malaise.
When the sector recovered in 2016 after authorities loosened their grip on purchases and development, tens of thousands of real estate firms borrowed heavily to build homes.
But as regulations tightened again this year, many of them have started to face a liquidity crunch, which was then worsened by sharply weaker demand due to tighter restrictions on speculative purchases.
Property sales by floor area dropped 15.8% in September, down for a third month, according to Reuters calculations based on the statistics bureau’s data.
The slowdown in the sector was also underscored by a 3.5% drop in property investments by developers in September, the first monthly decline since January-February last year at the height of the COVID-19 pandemic in China.
“All the data are poor,” said Zhang Dawei, chief analyst with property agency Centaline.
“Financing is hard, sales are tough, so of course, there has been no enthusiasm to build. For the first time in history, developers are encountering two blockages – blockages in sales and blockages in financing.”
The potential collapse of highly indebted real estate firms such as China Evergrande Group have raised concerns about systemic risks to the broader economy. The real estate sector accounts for a quarter of China’s gross domestic product.
Authorities will try to prevent problems at Evergrande from spreading to other real estate companies to avoid broader systemic risk, Yi Gang, governor of China’s central bank, said on Sunday.
On Friday, a central bank official said the spillover effect of Evergrande’s debt problems on the banking system was “controllable.”
“There is a likelihood that housing policies may loosen in the fourth quarter, and that would ease the pessimism in the property transaction data,” said Yan Yuejin, director of Shanghai-based E-house China Research and Development Institution.
On Friday, representatives from 10 Chinese Property Companies met government regulators to ask for an “appropriate loosening” on policy restrictions, financial news outlet Yicai reported.
China’s real estate shares have fallen 22% so far this year. On Monday, they were down 2.6% as of 0300 GMT.
In the first nine months, property investment rose 8.8% from a year earlier, slowing from 10.9% growth seen in January-August.
Funds raised by China’s property developers grew 11.1%, slower than the 14.8% rise seen in the first eight months.
(Editing by Jacqueline Wong)
Saks Fifth Avenue ecommerce unit aims for IPO at $6 billion valuation – WSJ
The ecommerce business of luxury department store Saks OFF 5TH is preparing for an initial public offering and targeting a $6 billion valuation, the Wall Street Journal reported Sunday, citing sources.
The company is interviewing potential underwriters this week for an IPO that could take place in the first half of next year, according to the report.
(Reporting by Sheila Dang; Editing by Daniel Wallis)
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