Housing starts hit 17-year high
Red-hot condominium market fuels growth in building; trend will continue this year
Framing construction gets underway despite yesterday's wind and rain on Mayfair Walk housing project on Speed Avenue in Victoria.
Photograph by : Darren Stone, Times Colonist
Carla Wilson, Times Colonist
Published: Wednesday, January 10, 2007
Greater Victoria home builders are looking at the coming year with optimism after housing starts in 2006 handily outstripped those in the previous year.
"I would think sales will probably be as good as last year," said Gordon English, president of the Victoria branch of the Canadian Home Builders' Association.
Last year, 4,896 new homes were started on Vancouver Island, up 12 per cent from 2005.
English expects this year to bring modest price increases and more pre-selling of new single-family homes, rather than building and then trying to find a buyer, particularly with high-end products.
After conversations with other builders, he also expects to see a little more attention to detail and more street appeal in new houses.
Greater Victoria's busy condominium market was a driver behind the past year's housing starts, said Peggy Prill, senior market analyst for the Canadian Mortgage and Housing Corp.
"Metro Victoria 2006 total housing starts achieved a 17-year high. When looking at condo and rental apartment starts alone, this region moved to a 30-year high, she said.
Last year, a total of 1,467 apartments -- the vast majority condominiums -- were started, up from fewer than 900 in 2005, Prill said yesterday. Many new housing starts were in Langford and Saanich, she said. As for single-family houses here last year, builders started 928, down slightly from 974 in 2005.
Island housing starts were down last month somewhat, to 374 from 416 in November. Greater Victoria led the list with 152 new starts, followed by Nanaimo with 122, and then Courtenay at 58.
Prill said demand for new homes on the Island remains strong but has slowed. Low unemployment, low interest rates and newcomers to the region are expected to continue to fuel the housing market.
Casey Edge, executive officer of the Victoria CHBA office, said housing affordability is a major issue in the region: Incomes are not keeping pace with rising housing costs.
He said the cost of housing cannot increase much beyond its current level. The average price of a single-family house in Greater Victoria was $502,447 last month.
With today's strong economy, Edge said, "It's a great opportunity for Greater Victoria to come together and start to deal with regional issues in terms of planning and in terms of building infrastructure." He suggests looking at harmonization of municipal codes, and light-rail transit. "If you build the infrastructure, then the planning must follow in terms of density."
B.C.'s healthy economy saw new construction and development reach a record assessed value of $19.5 billion, up 55 per cent from the previous year.
Philip Hochstein, executive vice-president of the Independent Contractors and Businesses of B.C., said, "It's been another phenomenal year for builders and tradespeople in every facet of construction and in every region of the province.
Nationally, CMHC chief economist Bob Dugan said housing starts are expected to remain strong in 2007, but are forecast to decrease to 210,900 units.
An estimated 227,400 new homes were started in 2006, although the rate of starts dropped slightly in December. Last year not only outstripped 2005 but represented the second-highest level in close to 20 years.
The volatile multiple-housing segment dropped last month and the number of starts on single detached homes continued to slide as well, the agency said. December's preliminary figures for housing starts stand at 16,574, compared with December of 2005 at 18,200.
The national slowdown in the singles market was not a surprise, said Bart Melek, senior economist with BMO Capital Markets. The trend started several months ago and will continue, he said.
"That tends to be the bellwether."
The numbers are just keeping in tune with the Canadian economy, he said, adding that fourth-quarter gross domestic product will not be that rosy, in part because of slower economic activity in the United States.
"You are getting affordability problems, prices are high in many, many areas," Melek said.
© Times Colonist (Victoria) 2007