BC housing starts lead the way

Metro Vancouver's housing starts were up 25 per cent for the first seven months of 2011 compared to the same period in 2010, according to Canada Mortgage and Housing Corp.

Statistics released last week show that the number of starts increased to 10,010, up from 8,005 to the end of July.

Starts for the month of July totalled 1,538 in Metro Vancouver, a 37-per-cent increase from 1,124 in July 2010 with most of the starts in Richmond, Burnaby, Surrey and the city of Vancouver with multi-family construction pushing up the numbers.

Although total housing starts have been volatile, recent activity suggests that single-detached starts troughed in early 2011 following a year-long downtrend and are now on a modest upward trend.

Throughout the rest of Canada, housing starts have remained strong despite changes in mortgage regulations last quarter that made it harder for first-time home buyers to enter the market, says Krishen Rangasamy, senior economist at National Bank Financial Inc.

After a strong showing in the first half of the year, housing starts rose 4 per cent in July to 205,100 units, beating most expectations. The number of single-family homes under construction actually fell 7.8 per cent, while multiple-housing units rose 13 per cent. British Columbia led the way, with Ontario and the Atlantic provinces also marking gains.

A low interest-rate environment and a healthy labour market are clearly providing support – so much so, that residential construction is poised to be a healthy contributor to second-quarter GDP, Mr. Rangasamy wrote in a research note.

But in coming months, Canadians should expect softer housing starts, as a slower global economy and a likely hit to consumer confidence from slumping financial markets make their mark, he says. The multiple-housing segment is likely to be more vulnerable, given its steeper ascent since the end of the recession.

Source: Vancouver Sun and Globe and Mail