Source: Statistics Canada

British Columbians poured $2.6 billion into residential real estate investment in the third quarter of 2004, Statistics Canada reported Wednesday.

The figure is a 25-per-cent increase from the same period in 2003.

In its release Statistics Canada said the substantial increase was due largely to heavy demand for new housing, though experts point to increasing housing costs as another driver.

“I would say [Statistics Canada’s findings] are consistent with what we’re seeing in new home construction,” said Carol Frketich, regional economist for Canada Mortgage and Housing.

“In British Columbia, we have had the same low mortgage rates, [as the rest of the country] and a lot of employment growth.”

Peter Simpson, CEO of the Greater Vancouver Home Builder’s Association, said Statistics Canada’s finding that investment in construction is up 25 per cent almost mirrors the picture of Lower Mainland housing starts.

“For the year to date, we’re up 22 per cent,” Simpson said.

“That puts us at 16,350 starts for the first 10 months [of 2004].”

He added interest rates have a lot of room to rise before they dampen demand for housing. Prices, however, are a more immediate concern to home builders.

Simpson noted that the prices for land, building materials and municipal development charges have all increased, which have all helped to push the average price of a Lower Mainland house to $300,000.

“That’s nothing to celebrate in my view,” Simpson said. “That’s just another impact on affordability thresholds.”

However, Simpson noted that consumer confidence is high and builders continue to find innovative ways to produce lower-cost options to meet demand.

Frketich said her outlook for 2005 is that B.C. will see housing starts increase over the 2004 figures due to continued employment gains and rising migration. But she doesn’t expect the same rate of growth.

Nationally, Statistics Canada said residential construction investment was up 14.5 per cent in the third quarter to $20.2 billion, bringing the total for January to September to $52.2 billion.

While British Columbia, at $600 million, showed the second-biggest dollar gain to Ontario‘s $800 million, its rate of growth was third compared with Prince Edward Island, which saw 25.7 per cent growth, and Northwest Territories, which saw 30 per cent growth.

© The Vancouver Sun 2004