Home starts on six-month high, but pace to slow before year’s end
Joe Couture
Province
Metro Vancouver home starts were up nine per cent in the first six months of 2008. Chris Wattie – Reuters
New-home construction in Vancouver has been even busier this year than last, despite a decrease in housing starts in B.C. in June, according to data the Canada Mortgage and Housing Corp. released yesterday.
Home starts in the Metro Vancouver area were up nine per cent during the first six months of 2008 compared to the same time period the year before.
The increases came mainly from starts of multiple-unit homes, which more than offset a decline in the number of starts of single-detached homes.
Still, by the time things shake out at the end of the year, CMHC predicts there will be 19,000 new starts in Metro Vancouver versus 20,700 last year.
“We’re expecting to see moderation this year overall, but still staying at very high levels,” said CMHC market analyst Robyn Adamache.
At the beginning of 2007, there were fewer than 100 new units available on the market in all of Metro Vancouver. Now there are about 300 new homes available — an increase, though still only one-third of the long-term average for new-home inventory, Adamache said.
“Inventory is starting to creep up — it’s not at the rock-bottom levels of last year,” she commented. The resale market is also better supplied, meaning home buyers now have “more choice everywhere,” she added.
That has an effect on the cost of buying a home — while prices are continuing to rise, the rate of growth is starting to slow, Adamache said.
While 2007 saw a 12-per-cent increase, prices have only risen this year by 10 per cent, and that is expected to taper off to eight per cent by year’s end.
The forecast for next year is five-per-cent price growth, Adamache added.
“The red-hot market is moderating, becoming more normal,” she said.
Home starts in the Abbotsford/Fraser Valley area were up by one-third in the first half of the year, boosted by numerous new townhouse and apartment projects breaking ground.
Starts in the province as a whole also are up over 2007, though the second quarter of 2008 saw a slowdown, most of which can be attributed to June.
In that month, starts in B.C. were down 10.8 per cent from June 2007.
Both single-detached and multiple-unit home starts were down overall. High land and building costs were two of the major factors contributing to the downward trend province-wide, according to CMHC.
Still, the number of homes under construction in the province is near a record high, according to Carol Frketich, CMCH’s regional economist for B.C..
Nationally, all provinces but Saskatchewan and Nova Scotia saw a decline in housing starts in June, and the country as a whole saw a 4.3-per-cent decrease in starts over May.
© The Vancouver Province 2008