Housing Starts Drop In B.C., But Rise In Metro Vancouver: CMHC Report
"I'm not surprised the starts are down, but I'm surprised they're down that much," M.J. Whitemarsh, CEO of the Canadian Home Builders' Association of B.C., said in an interview Tuesday after the Canada Mortgage and Housing Corp. released a report showing starts were down 5.9 per cent in February to 24,100 on a seasonally adjusted basis.
"One of the things that's impacting housing starts is uncertainty over the HST," she said of the controversial tax, which will go to referendum this year. "People are holding off either buying new houses or even doing renovations because [the HST] may be gone. It's stifling consumer confidence.
"And if people aren't purchasing, builders aren't building."
According to figures released by CMHC, home construction across Canada edged up more than expected in February, but those gains are unlikely to be matched in the coming months as tighter-mortgage rules and higher-lending rates could begin to dampen building activity.
CMHC said the seasonally adjusted annual rate of housing starts was 181,900 units during the month, led mainly by condominium construction in Ontario and the Prairie provinces.
Although housing starts were down 5.9 per cent in B.C., there were differences around the province, with Metro Vancouver much stronger than other areas.
"For the first two months of the year, Vancouver housing starts are up 23 per cent [compared to January and February 2010]," CMHC's regional economist Carol Frketich said in an interview. "That reflects a stronger resale market in [Metro Vancouver]. Also, Vancouver has had stronger job creation than the rest of the province."
Frketich said urban B.C. starts were also up 5.1 per cent for the first two months of 2011 compared to last year, but fell in February.
"The numbers can fluctuate from month to month," said Frketich, adding that the results reflect CMHC's forecast.
CMHC noted there were 1,414 housing starts in the Vancouver CMA in February, a slight increase from the same month a year ago, with strength in multiple unit housing starts in Richmond, Coquitlam and Surrey accounting for most starts.
Greater Vancouver Home Builders' Association president and chief executive officer Peter Simpson noted in an interview that there were 2,850 housing starts in Metro Vancouver for the first two months of 2011, compared to 2,319 in the same period in 2010.
"We've certainly come a long way from the dark days of 2009," he said. "We're going in the right direction."
The Abbotsford CMA had 25 housing starts in February, down slightly from 37 starts during the same month a year ago.
"Canadian residential construction activity appears to be stabilizing at a level consistent with underlying demographic demand," said BMO Capital Markets economist Robert Kavcic.
"In the quarters ahead, home sales could be challenged by higher mortgage rates and shorter amortizations, which will eventually weigh on starts, but the maturing economic recovery should help," he added.
On Monday, Statistics Canada reported the value of building permits fell unexpectedly in January due to weaker residential and non-residential activity.
The agency said permits were down 5.1 per cent to $5.4 billion during the month.