Residential construction staying robust

The Lower Mainland homebuilding industry has taken heart from new figures showing the pace of residential construction staying robust so far this year.

Brisk multi-family construction pushed overall July housing starts for the Vancouver area up 25 per cent from the same month last year, Canada Mortgage and Housing Corp. said yesterday.

Year-to-date starts in the area are up 11.2 per cent from the year-earlier period, CMHC said.

Despite more homes being available on the resale market throughout the year, developers have moved forward and begun construction on projects that have been in the planning stage," CMHC market analyst Richard Sam said.

"With a number of multiple-family projects still in the pending stage, [we] expect housing starts to be at high levels for the rest of the year."

Peter Simpson, CEO of the Greater Vancouver Home Builders' Association, said the Lower Mainland residential-construction sector would score its best year since 1993 if the current pace of housing starts holds up for the rest of the year.

"Being realistic, we still have five months left to go," Simpson said. "But even if we drop 2,000-plus starts below last year's pace it will still give us five straight years of 19,000-plus starts on average."

Projects aren't selling as quickly as they did, but underlying appetite for new homes remains strong, Simpson said. "We're finding the old saw of 'location, location, location' is being replaced by 'location, value and builder reputation.' "

"People are being very careful these days and are taking their time."

Year-over-year multi-family starts jumped 35 per cent in July, while single-detached starts fell three per cent.

In the Abbotsford area, overall starts for the first seven months of the year rose 24 per cent from the same period last year.

But multi-family starts in Abbotsford in July fell 83 per cent from the same month last year, CMHC said.

Nationally, the picture wasn't pretty. The annual pace of housing construction starts plunged 13.6 per cent in July to 186,500 from 215,900 in June, CMHC said.

That's the steepest monthly drop this year and much steeper than expected, leaving starts down nearly 16 per cent from a year earlier.

Regionally, Ontario suffered the steepest drop, at 39 per cent. Starts in the Prairies declined marginally, and B.C., Quebec and Atlantic Canada posted modest gains.

Meanwhile, Statistics Canada reported that new home prices in June were up only 3.5 per cent from a year earlier, the fifth-straight monthly deceleration, and up just one per cent from May.

"This report was fairly ugly, and adds to the growing body of evidence pointing to the cooling in the Canadian housing sector," said TD Securities economist Millan Mulraine.

"However, despite the recent slowdown and the moderation in activity, it is in no way comparable to the prolonged correction that we have been seeing in the U.S."

In Vancouver, year-over-year prices rose by 1.8 per cent in June, while those in Victoria fell by 0.4 per cent.

Regina continued to experience the largest gains, with prices up 28.5 per cent from June 2007, followed by a 22.2-per-cent increase in St. John's, N.L., 16.3 in Saskatoon, and 11.5 per cent in Winnipeg.

(prepared by Paul Luke/Vancouver Province)