Greater Victoria’s feverish pace of residential construction continued last month.
Builders got started on several new projects during March, including 88 single-family homes and 146 apartment and condominium units. That was more than double the 119 starts during the same month a year ago, according to data from the Canada Mortgage and Housing Corp. Friday.
The federal agency said the increase was highlighted by a sharp rise in the multiples category, particularly starts of rental apartments. “Builders have responded to strong demand for new rental units, evidenced by a relatively low vacancy rate and rising rents,” said CMHC senior market analyst Niavarani Zadeh. “As a result, rental apartment starts captured more than 75 per cent of multi-unit construction in the first quarter.”
Vacancy rates for rentals have been below five per cent for years in the region and the lack of inventory has pushed up monthly rates, according to analysts.
Langford led the way for entire region during March with 129 of the 146 multiples started and 37 of last month’s 88 single-family homes. Colwood followed with 12 single-family homes started, followed by nine in the Highlands and seven in Saanich.
During the first three months of the year, Greater Victoria is well ahead of last year’s residential-construction pace with 218 single-family homes started, compared to 144 during the same stretch in 2015. There have also been 375 multiples started this year, as opposed to 332 at this point in 2015.
In other areas of the Island, Campbell River has started on 27 housing units over the first quarter of this year, up from 21 a year ago. Duncan has started on 40 housing units, up from 32 last year, while Port Alberni has 14 starts this year compared to nine a year ago.
Overall, CMHC said the pace of housing starts across Canada declined in March due to a slowdown in multi-unit construction. The agency said the seasonally adjusted annual rate was 204,251 units in March, down from 219,077 in February. However, the drop was less than what had been expected by economists who were looking for an annual rate of 190,000 for the month, according to Thomson Reuters.
“The current building pace suggests that residential investment should continue being a growth contributor through the first half of the year, as started projects are seen through completion,” CIBC economist Nick Exarhos said.
CMHC said the six-month moving average of housing starts slipped to an annual rate of 196,783 units in March compared with 201,618 in February.
Low mortgage rates have helped the housing market across the country. But the drop in oil prices since late 2014 has affected the regions in different ways.
TD Bank economist Warren Kirkland noted that B.C. and Ontario are likely to continue to enjoy strong gains in construction activity along with better economic conditions.
“Construction activity is likely to be a drag on growth in provinces that are experiencing both a deterioration in economic conditions and a housing market downturn, including Alberta and Saskatchewan,” Kirkland said.
“Everyone else will be somewhere in the middle, where low rates will help drive a modest uptick in housing demand, but a still elevated level of inventory of homes for sale may constrain construction activity.”
For March, the pace of urban starts fell 7.0 per cent to 185,022 units as work in some parts of B.C., Quebec, Atlantic Canada and the Prairies slowed, but picked up in Ontario. Multiple-unit urban starts dropped 9.7 per cent to 123,207, while single-detached starts slipped 1.1 per cent to 61,815. Rural starts were estimated at a seasonally adjusted annual pace of 19,299.