But housing starts up despite shortage of skilled trades, higher labour costs
Derrick Penner
Sun
The rate of inflation on new-home prices in Vancouver slowed to 6.1 per cent in September, according to Statistics Canada’s housing price index.
Statistics Canada released the report Thursday, which tracked a deceleration of housing inflation over 10 months. September’s rate is lower than the 6.5-per-cent year-over-year inflation recorded in August.
Nationally, Statistics Canada found that contract prices for new homes had increased 6.2 per cent at the end of September compared with the previous year.
Cameron Muir, chief economist for the B.C. Real Estate Association, said there are some factors that are converging to ease the cost pressures that builders have faced. Contractors are now better able to coordinate their resources and operate more efficiently.
Prices for building materials have stopped rising so quickly due to the collapse of the American housing market, which has reduced demand. Lumber prices, for instance, are much lower than they were last year, Muir said.
“We’re certainly seeing builders able to ramp up production over the last two or three months,” Muir said.
Canada Mortgage and Housing Corp. also released its report on housing starts Thursday which showed a 52-per-cent increase in new-home construction in October, compared with the same month a year ago.
Builders started work on 1,907 new homes in October, compared with 1,256 in the same month a year ago.
“That’s positive for consumers out there not only because it gives them more selection, but it eases the pressure on new-home prices,” Muir said.
The housing-starts report showed that 79 per cent of all new Vancouver housing starts to the end of October — 13,325 of 16,787 — were multi-family condominium or townhouse projects.
However, builders still face significant cost pressures from rising land and labour costs, which Muir said they will ultimately have to pass on to buyers.
Peter Simpson, CEO of the Greater Vancouver Home Builders’ Association, said skilled tradespeople are still in short supply, “although we’ve had some cases where some people are available now.”
“We haven’t seen a lot of [buyer] push back [on prices] yet,” Simpson added. “But we’re concerned about it, because higher price [increases] mean more folks out looking for homes are in danger of not being approved for mortgages.”
Simpson added that the number of multi-family projects being built reflects the shift in what people can afford.
“There is a [price] ceiling for everybody,” Simpson said. “Once that ceiling is reached, you’re either out of the market, or you lower your expectations.”
