Vancouver’s new housing sales have been on a blistering pace over the past two years and the inventory of new condos has fallen to historic lows, so it was a surprise to some when housing starts plunged through the first half of 2017.
Total housing starts in the city of Vancouver have dropped 80% in the first six months compared with the same period in 2016, according to Canada Mortgage and Housing Corp. (CMHC), from 5,784 to 1,860 units.
Single-family detached starts in the city declined from 708 to 462 houses, while starts of condominium apartments fell from 3,290 in the first half of 2016 to just 880 this year, a 73% decline.
“It is a surprise, considering the high demand,” said Vancouver real estate consultant and author Ozzie Jurock.
A report prepared for the Urban Development Institute, Pacific Region, found that, despite near-record construction levels, there were fewer than a dozen new and unsold condominium apartments in Vancouver in the first quarter – a record low.
Total housing starts across the Metro Vancouver region also fell, but by a smaller margin, to 12,200 units so far this year, compared with 14,840 in the same period a year earlier.
Increases were seen in the larger suburban communities of Burnaby, Surrey, Coquitlam and New Westminster.
Eric Bond, CMHC pprincipal market analysis in Vancouver, noted that the number of homes under construction hit a record high of 39,141 units across all of Metro Vancouver in May and remained near that level in June. He suggested the downturn in Vancouver starts may relate to developer fatigue.
“The constraints on builders are very real in terms of the availability and costs of equipment and materials, which means further increasing the pace of construction is challenging,” Bond said.
Vancouver developer and architect Michael Geller said the lack of condo starts in Vancouver may be linked to a current backlog of applications. “[The developers] are probably waiting for permits,” he said.