Housing starts on pace for a record year

A surge in suburban residential construction has put Greater Vancouver housing starts on pace for their best year in more than a decade. Greater Vancouver builders started construction on 9,961 new housing units as of the end of June -- 16 per cent more than during the same six months of 2005.

Peter Simpson, CEO of the Greater Vancouver Homebuilders' Association, said if builders maintain this pace, they will surpass 2004 to make this year the region's best year for construction since records were set in 1994.

"We thought we would have levelled off by now," Simpson said, so "this increase is somewhat surprising."

Growth has slowed in markets closer to downtown Vancouver. Vancouver itself, for instance, saw starts in the first half of 2006 fall nine per cent since last year, and Burnaby's starts plummeted 18 per cent.

However, development exploded in the suburbs. Surrey saw starts up 42 per cent, and in Maple Ridge, they were up 78 per cent.

CMHC market analyst Robyn Adamache said the suburban numbers are rising because developers are building more multiple-unit projects in areas outside the city of Vancouver.

"From the supply side, developers are wanting to build multiple units because they're much more profitable to be looking at, with the prices of land the way they are," Adamache said.

She added that on the demand side, buyers are continuing to look more at townhouses and condominiums as being a more affordable alternative.

Overall, Adamache said it appears that homebuilders are ramping up workloads to meet market demand given that new housing inventories remain "at historic low levels."

Adamache said CMHC counted only 712 vacant and unsold new housing units available across Greater Vancouver, which is down considerably from the 15-year average of 3,000 new units.

"Last year we had record sales," Adamache added. "Inventories continue to be low on a trend basis, so that is showing that demand is very strong."

Across B.C., urban housing starts topped 16,309 units in the first half of 2006, a 14-per-cent increase from the same period in 2005.

Nationally, CMHC reported that the pace of new-housing construction was up 4.5 per cent in June, which, if it holds, would see Canadians build 232,200 new homes during 2006.

(prepared by Derrick Penner/Vancouver Sun)