Statistics Canada pegs rise at 25.5 per cent over ’03
Michael McCullough
Sun
British Columbia led the country in the growth of residential construction investment last year, according to figures released Tuesday by Statistics Canada.
Just over $10 billion was spent on new home construction and renovation in the province in 2004, a 25.5-per-cent increase over 2003.
Spending on home building across Canada grew 14.2 per cent to more than $70 billion, the agency said, representing the seventh consecutive year of growth. Quebec was a close second to B.C. with 22.6-per-cent growth, while Ontario and Alberta lagged the national average at 8.5 and 5.4 per cent, respectively — suggesting the home-building boom there may have peaked.
By contrast, M.J. White-marsh, chief executive of the B.C. chapter of the Canadian Home Builders Association, expects the home-building business on the West Coast to at least maintain the same pace in 2005.
Speaking from St. John’s, Nfld., where the CHBA is holding its national board meetings, Whitemarsh said presentations by economists at the event predict that B.C. will be the only province to see further growth in construction spending this year, and possibly into 2006 as well.
“There is still a pent-up demand in B.C. after 10 years of low growth,” she said. “We have builders in our association . . . who have orders on the books right up to 2006.”
In the fourth quarter, $2.6 billion was spent on home construction in B.C., a 15.3-per-cent increase over the same period in 2003.
B.C.’s spending over the whole year came largely from new home construction, whereas Ontario‘s building tab was more directed at renovations.
Of the $70-billion national total — a new record — $23.3 billion was spent on new single-family homes (up 11.2 per cent), $7.3 billion on new rental apartments and condominiums (+29 per cent), $28 billion on renovations (+13.6 per cent) and $6.3 billion on acquisition costs for resale properties (+14.7 per cent).
The agency said low mortgage rates, a strong labour market, high consumer confidence and low apartment vacancy rates in Vancouver and Montreal contributed to the strong picture. But rising building costs were also a factor.
“The increase in housing starts and the rise in the average value of these starts explain the sharp increase in investment in both the construction of new single-family homes and new apartments-condominiums,” the Statistics Canada report said.
Rising labour and material costs represent the downside of having strong residential and non-residential construction activity at the same time, said industry consultant Kerry Jothen, CEO of Human Capital Strategies in Victoria. But the investment climate in B.C. is sufficiently bullish that buyers are willing to absorb the higher home prices.
Jothen said he expects the construction boom to peak towards the end of this year. “We wouldn’t be surprised if it even goes into 2006,” he said.
Peter Simpson, CEO of the Greater Vancouver Home Builders Association, said he expects both new construction and renovations to grow in the Lower Mainland this year.
He cited a Canada Mortgage and Housing Corp. estimate that renovation spending in B.C. will top $5 billion this year.
Baby boomers who can’t afford to move upmarket are deciding to fix up what they have, Simpson said.
“Our renovators are going great guns,” he said.
© The Vancouver Sun 2005