Low mortgage rates, increased consumer confidence cited
Keith Fraser
Province
CREDIT: Wayne Leidenfrost, The Province Townhouses are under construction at Garden City and Blundell in Richmond.
CREDIT: Jason Payne, The Province Construction crew works on the top of another highrise in Vancouver’s Yaletown yesterday.
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Fuelled by low mortgage rates, increasing job growth and rising consumer confidence, Lower Mainland housing starts in October hit the highest levels in more than 20 years.
The Canada Mortgage and Housing Corp. released figures yesterday showing that a total of 1,981 units were started last month, up 116 per cent from October last year.
The only time October housing starts were higher was in 1980, with 2,194 unit starts.
Last month’s total housing starts were also the most for any month in the Lower Mainland since July 1996.
“It’s good news and all of our members are happy,” said Peter Simpson, chief operating officer of the Greater Vancouver Home Builders Association.
“There’s an overall consumer confidence boost in B.C. for a number of reasons. The Olympics are helping with people getting their heads into a positive mood. I think they’re happy business-wise in what’s happening in the province.”
First-time buyers taking advantage of the low rates and people purchasing homes for investments are the key buyers in the marketplace.
“They’re the lowest interest rates in some time,” said Simpson. “This has lowered the affordability threshold, particularly for first-time buyers. They’re able to trade their rent cheques for mortgage payments and, in many cases, for less than what they’ve been paying in rent. They’re in the market now and they’re gaining equity.”
Multiple starts — low and highrise buildings and townhouses — last month climbed 283 per cent to 1,553 units in the Lower Mainland, while home construction dipped 17 per cent to 428 units over the same period last year.
Year-to-date housing starts in Greater Vancouver have increased 25 per cent to 13,445 units, with homes up nine per cent to 4,570 units and multiple starts climbing 35 per cent to 8,885 units.
Province-wide total housing starts climbed 57 per cent to 2,865 units in October this year over last October and year-to-date figures were up 25 per cent to 20,846 units over the same period in 2002.
“To put a human face on that, the increase in housings starts this year, compared to last year, has added another 7,500 jobs in the construction industry in the Lower Mainland,” said Simpson.
One of the top growth areas is downtown Vancouver, with its massive increase in highrise residential construction, much of it already pre-sold.
“We heard a stat that there are 21 cranes at work right now, responsible for 2,700 housing units in the downtown alone,” said Simpson. “Of those 2,700 housing units under construction, less than 200 are available to be sold.”
Another big growth area is Surrey, with its strong single-family developments.
“That’s a response to Surrey having a very large land supply,” said Cameron Muir, market analyst for the CMHC. “Surrey accounts for about 25 per cent of all land starts across the Lower Mainland.”
Simpson noted that it’s more of a “steadily increasing market” than a boom, since the new totals are about 66 per cent of what they were in 1993.
Muir predicted that the housing increases will continue well into next year while mortgage rates stay low.
There will be a push for condo construction in Vancouver in the next few months before levies jump to $6,000 per unit from $2,500, he added.
© Copyright 2003 The Province
