OTTAWA — The housing boom should continue into this year, according to two federal agencies.

“Consumer confidence remains high while mortgage rates remain low,” said Bob Dugan, chief economist at Canada Mortgage and Housing Corp., which predicted yesterday that construction would begin on 203,900 homes this year, down from a 15-year high of 218,400 in 2003, but still the third-highest level since 1989.

“These factors, combined with accelerated economic growth and continued job creation will contribute to the continued strong performance of the housing market this year.”

The CMHC report also said B.C.’s housing starts are expected to remain solid this year and that it’s expected to be one of just two provinces that will see an increase in starts over 2004. The other is New Brunswick. (see table).

The upbeat forecast was issued as Statistics Canada reported most provinces and several cities “smashed records” in 2003 for both residential and non-residential building intentions, issuing permits for nearly $51 billion worth of construction, the first time the $50-billion mark has been broken.

“The torrid demand for new housing drove construction intentions to their new peak,” the agency said, reporting that residential permits soared to an all-time high of more than $32 billion — 8.3 per cent above the previous record high set only a year earlier.

And the boom continued through December, it said, noting the value of residential permits reached an all-time monthly high. “Home-builders will be busy at the beginning of 2004,” it predicted.

Meanwhile, non-residential permits issued last year also hit a peak of $18.8 billion, up 6.3 per cent from 2002, led by record institutional construction plans, and reinforced by strong commercial and industrial building plans.

In terms of total construction plans, all provinces, other than Prince Edward Island and Alberta, posted records, led by Quebec.

Leading the construction boom among cities were Toronto, thanks to industrial and commercial construction projects, and Montreal, as a result of strong demand for new dwellings. RBC economist Carl Gomez said total construction intentions in December were stronger than expected and capped off a banner year for the construction industry.

The harsh winter weather in January across much of Canada may have slowed the pace of construction last month, he said.

“Nevertheless, the low interest rate environment being supported by the Bank of Canada, along with a lack of housing inventory in some markets . . . continues to point to very healthy housing activity this year, although perhaps not the record-breaking activity we saw last year,” Gomez said.

CMHC also cautioned it expects interest rates will begin to rise in the latter half of this year, which, along with a more balanced market, will temper building activity towards year end, resulting in a further dip in housing construction next year to 191,800.

PROVINCIAL HOUSING OUTLOOK

2003 2004 2005

Total Housing Starts Actual Forecasts Forecasts

Newfoundland and Labrador 2,692 2,500 2,300

Prince Edward Island 814 750 700

Nova Scotia 5,096 4,100 3,800

New Brunswick 4,489 4,625 4,200

Quebec 50,289 48,000 45,200

Ontario 85,180 78,000 72,500

Manitoba 4,206 3,700 3,600

Saskatchewan 3,315 3,050 3,035

Alberta 36,171 32,200 29,500

British Columbia 26,174 27,000 27,000

Source: CMHC

© The Vancouver Province 2004