Housing starts projected to be as high as 2004’s by home builders’ group
Michael Kane
Sun
Residential construction spending in British Columbia hit a record $2.6 billion during the first three months of this year, putting it on track to match last year’s total, the best in a decade.
Expenditures were up 7.2 per cent from the previous first-quarter record of $2.43 billion set last year, Statistics Canada reported Wednesday.
“We are going to have some monthly ups and downs in housing starts, but I think by the end of the year, we will find they are at least as high as last year’s level,” said Peter Simpson, CEO of the Greater Vancouver Home Builders’ Association.
“The economists agree we have several more years of buoyant market in B.C., particularly in the Lower Mainland.”
Statistics Canada said historically low mortgage rates continue to boost affordability, along with higher disposable income and strong consumer confidence. Outlays are also being driven up by higher house prices and buoyancy in the renovations sector.
Across Canada residential construction spending totalled $15.3 billion in the first quarter, up 8.6 per cent from the same period in 2004.
Both the national and B.C. advances reflect gains in all three components of residential construction investment — new housing, renovations and acquisition costs which include taxes, land development costs, legal fees and mortgage insurance premiums.
The three components are at their highest level for any first quarter since record keeping began in 1961, the federal agency said. At the same time the 8.6-per-cent national growth rate actually reflects a minor slowdown because it was the lowest growth rate since the second quarter of 2000.
While spending continues to climb in B.C., a slowdown in the annual rate of growth is considered inevitable after last year’s breathtaking 33.4-per-cent jump from $1.8 billion in the first quarter of 2003.
“We are not calling for any significant increase over last year because it is going to be hard to beat but we think it will at least reach that level,” Simpson said. “It could go higher but we’ll see at the end of the year.”
He said there is “nothing but optimism” among his members who include suppliers and manufacturers, as well as builders and renovators.
“Low mortgage rates are keeping debt service costs manageable. That’s the bright light that’s keeping the market going in an era of very high housing prices.
“We don’t believe that we are even past the midway point of this growth cycle. The only impediment right now is rising costs for building materials and labour.”
Across the country, spending for new housing construction was $7.6 billion in the first quarter, up 6.6 per cent over the same period last year. Single-family homes were up 4.7 per cent to $4.7 billion, while spending on apartments and condominiums jumped 16.1 per cent to $1.8 billion.
Renovations accounted for 40 per cent of the total residential construction investment with spending up 10.8 per cent to $6.2 billion from $5.6 billion in the first quarter of 2004.
Acquisition costs — taxes and fees — rose 9.7 per cent to $1.4 billion.
© The Vancouver Sun 2005