British Columbia housing starts remained elevated in August despite pulling back from stellar June and July performances.
Urban-area housing starts reached a seasonally adjusted annualized pace of 42,875 units, according to the latest Canada Mortgage Housing and Corp. data. While down 9.1% from July’s pace of 47,170 units, levels were slightly higher than in August 2020. Unsurprisingly, August’s pullback reflected declines in the highly volatile multi-family sector as detached housing starts were unchanged. Housing starts typically fluctuate due to the impacts of large apartment and townhome projects.
August’s decline owed largely to a 9% decline in the Vancouver Census Metropolitan Area (CMA), which is unsurprising given the dominance of multi-family construction in the region. Impacts from other metros on headline numbers were nominal given relative sizes of markets, but Abbotsford-Mission starts rebounded. Starts in smaller urban areas fell dramatically by 20%, which may have been due to wildfires throughout the province.
Despite the decline, 2021 housing starts have been stellar. Year-to-date growth reached 36% through the first eight months of the year. While partly reflective of a soft 2020 performance, this was the strongest start to the year on record and was further amplified by rural area gains. Detached starts in urban areas rose 25%, with multi-family starts up nearly 40%.
Growth was broad among metro areas, with Vancouver CMA starts up 34%, Victoria up 43% and Kelowna up 33% through August. Abbotsford-Mission starts fell 22%. Smaller urban markets on net contributed to higher starts with growth of more than 40%. Broad growth reflects a combination of factors, including low interest rates and pandemic drivers such as remote work and early retirements. Demand for recreational properties likely fuelled a movement of individuals away from the large and expensive urban cores into already under-supplied suburban and smaller urban areas.
These factors have led to a boom in construction across the province as builders struggle to meet the sharp upturn in demand. •
Bryan Yu is chief economist at Central 1 Credit Union.
