Record housing construction led a faster-than-expected gain in building permits in January, Canadian government data showed as the central bank said any further housing sector stimulus could bring "trouble". The value of residential building permits granted by municipalities jumped 26.3 per cent to C$4.6 billion (HK$32.1 billion) Statistics Canada reported. One of the largest municipal gains was led by multiple-unit housing in Vancouver, a market that national policymakers have said was most at risk from over-building and a glut. Bank of Canada deputy governor John Murray said the country probably would avoid housing crashes that happened in the United States and Britain, citing the example of the stability of Australia where overall consumer debt burdens were higher than Canada. Consumer spending brought Canada through the worst of the 2008 global financial crisis as banks avoided collapse while low interest rates and government stimulus boosted debt-fuelled home buying. "The household sector is now largely played out; pushing it much further could lead to trouble," Murray said. "Although countries such as the US and the UK have experienced sharp and painful corrections at comparable debt and price levels, leading to much more serious economic and financial consequences, it would be a mistake to assume that a similar outcome is therefore inevitable in Canada." The central bank forecast for a soft landing of the sector conflicts with the opinion of Pacific Investment Management (Pimco), which says home prices may fall as much as 20 per cent in the next five years. "Canadian housing is overvalued," Ed Devlin, the London- based head of Pimco's Canadian portfolio, said. "I would expect to see it happening at the end of this year. We're going to start to see housing roll over." Pimco has been reducing its holdings of Canadian debt after a run of strong profits, Devlin said. The housing decline would lead to a pull-back in consumer spending, capping economic growth this year in Canada at around 2 per cent, he said. Non-residential permits fell 14.6 per cent to C$2.39 billion in January, Statistics Canada said. That reduced the gain in total building permits to C$6.99 billion, a rise of 8.5 per cent. Economists forecast total permits would climb 1.7 per cent, according to the median of the nine responses to a Bloomberg survey. Vancouver building permits rose 30.5 per cent in January to C$627 million. It was one of the largest gains by city, along with Toronto and the Alberta capital of Edmonton, Statistics Canada said in its report. Permits for multi-family housing projects such as apartments and condominiums jumped 42.8 per cent to C$2.10 billion, Statistics Canada said. Single-family housing permits rose 15 per cent to C$2.50 billion. The housing market may still slow if mortgage interest rates increased or if builders cancelled projects because they saw signs of overbuilding, said Robert Hogue, senior economist at Royal Bank of Canada in Toronto. "At this stage we don't need that many more units being started, because lots of them will be delivered over the next couple years," he said.