Housing boom in Vancouver to beat HST

New home construction in the Vancouver region soared 76 per cent in the first quarter of this year from the same period in 2010, Canada Mortgage and Housing Corp. says.

Housing starts in the area climbed to 3,198 in the first quarter of 2010 from 1,819 a year earlier, CMHC said Monday.

"We continued to see strength in single detached new home construction in March, particularly in Surrey and Vancouver city, CMHC senior market analyst Robyn Adamache said.

The Abbotsford area saw 44 housing starts in March, up from six a year earlier, CMHC said.

Across urban centres in B.C., foundations were laid for 5,337 new homes in the first quarter of this year, up 111.6 per cent from 2,522 for the same period in 2009.

On a seasonally adjusted basis, however, housing starts for B.C. slipped to 22,100 in March 2010 from 26,400 in February.

Nationally, housing starts dipped slightly in March but are clipping along at levels not seen since 2008, a level unlikely to be sustained into the second half, economists said.

Seasonally adjusted housing starts slipped to 197,300 units in March from a revised annual rate of 200,400 units in February, CMHC said.

The March decline was blamed on a sudden drop in the always-volatile multiple-units segment.

Not since October 2008 has the number of annualized starts surpassed 200,000, added BMO Capital Markets economist Robert Kavcic. February starts were previously reported at 196,700 units.

Taken together, he noted, the recent three months' data represent an increase in the first quarter of 8.2 per cent, following gains of 15.2 per cent and 22.1 per cent in the previous two quarters.

Put another way, the first quarter's 8.2 per cent pop represents a 37.3 per cent compound annualized gain, wrote Scotia Capital economists Derek Holt and Karen Cordes.

"Are these levels of activity sustainable?" asked National Bank economist Matthieu Arseneau. "We do not think so."

Observers agreed the strong pace bodes well for the economy at large -- as the cost of home building spreads through the construction, financial, retail and other industries -- but is unsustainable.

Pascal Gauthier, economist at TD Financial Group said, "starts have been running above replacement levels for three months, and a fair measure of multiple units under construction are still in the pipeline to be completed this year."

And the current strength appears to be the result of buyers racing to lock in at low borrowing costs, get ahead of tighter standards for mortgage qualification and beat the implementation of the HST in Ontario and B.C. in July, Kavcic said.

(Source: Vancouver Province)