"Our view stands in contrast to the more rosy consensus forecast that GDP growth will accelerate to 2.3% in 2014"
- Amna Asaf and David Madani , Capital economists
Many positive outlooks for economic growth of Canada in 2014, which have been supported by a better than expected performance in the third quarter of last years along with a recovery of the global economy overall, might be overoptimistic. This fact is supported by the latest survey from the Statistics Canada, as the number of building permits turned lower for the first time in a quarter in November, suggesting the housing market is still struggling to grow as consumers are not showing willingness to make huge purchases amid record levels of debt. Data showed the value of municipal permits sank 6.7% to $6.75 billion, while analysts expected only a 2.7% reduction, and a serious step backwards from a revised 8.0% gain in October. A drop was led by multiple-unit housing, as projects such as condominiums and apartments decreased 8.7%, curbing last year's gain to 25%. Last month, the Bank of Canada Governor Stephen Poloz expressed his concerns the housing market will experience a soft landing. Moreover, the nation's Finance Minister Jim Flaherty said there is a high risk of overbuilding in Toronto and Vancouver.
On a yearly basis building permits advanced 5.4% in November. The last but not least indicator that speaks in favour of a slowing housing market, is the home price index, which remained unchanged from a month earlier, while on a yearly basis increased just 1.4%, the slowest pace since February 2010.
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