Limited land and shortages of skilled labour main reasons; starts rise in rest of province
Fiona Anderson
Sun
Construction Worker Photograph by : Ian Smith, Vancouver Sun
Housing starts in Vancouver and other major urban areas in the province dropped in 2005, as limited land and a shortage of skilled labour put the brakes on development. But in the province as a whole, starts were up, albeit slightly, according to numbers released Tuesday by the Canada Mortgage and Housing Corporation.
Housing starts in British Columbia, excluding rural areas, increased half a per cent, from 30,874 to 31,043 units.
But starts in Vancouver fell three per cent — from 19,430 to 18,840 units — with drops of almost 13 per cent in Victoria and seven per cent in Abbotsford. The lower housing starts were offset by a 24-per-cent growth spurt in new houses in Kelowna, and 11.5-per-cent growth in other urban centres within the province.
The move away from the Lower Mainland into the Interior reflects the growing difficulty with building in Vancouver and Victoria and other major urban centres, CMHC senior market analyst Cameron Muir said in an interview.
“The reason for the decline is not waning consumer demand,” Muir said. “It’s really a function of [having] in those very active markets increasingly complex building sites, rising construction costs and competition for skilled labour [which] is putting a ceiling on the number of units builders can produce each year.”
Constrained land supply, which necessitates high-density housing, takes more planning and more effort in site preparation, adding to the complexity of development and slowing down starts, Muir said.
Multiple unit starts kept the province on its upward trend with an increase of 5.6 per cent in 2005 from 18,545 units to 19,589. At the same time, the number of single starts fell 7.1 per cent, from 12,239 to 11,454.
The number of housing starts in 2005 was the highest B.C. has seen since 1994, when a struggling Ontario was forcing workers to go West to find jobs, Muir said.
In that year, B.C. had 40,000 net new residents. In 2006, between 7,000 and 10,000 people are expected to move to B.C. from elsewhere in Canada, Muir said.
CMHC predicts that housing starts will slacken slightly in 2006 in both Vancouver and the province with Vancouver seeing about 18,000 to 18,500 starts, and the province — including rural starts which are not included into Tuesday’s statistics — down to 31,600 units. The decline would be largely caused by further constriction in the urban centres, Muir said.
Month over month, housing starts in B.C. were up almost six per cent in December compared to November, fueled by a 9.4 per cent increase in multiple units and a slight drop in single detached homes.
Across Canada, residential starts were down 4.1 per cent to 223,900 units, the CMHC stated in a news release. That downward trend is expected to continue as mortgage rates rise.
The slight decrease in housing starts in Vancouver in 2005 is “not a big deal,” Peter Simpson, CEO of the Greater Vancouver Home Builders’ Association, said in an interview.
Simpson attributes much of the slowdown to the builders themselves who are slowing their pace to ensure tradespeople are available when needed.
Simpson expects housing starts in Vancouver to continue to fall in 2006.
And as the cost of land and the cost of developing that land continue to go up, so will housing prices, Simpson said.
© The Vancouver Sun 2006
