Lower starts, less permits in Victoria's residential market

Lower starts, less permits in Victoria's residential market

Lower starts, less permits in Victoria

Victoria’s market is currently characterized by lower starts and a declining value of building permits.

Data from Canada Mortgage and Housing Corporation showed that the city’s home construction activity from January to November 2019 dropped by 7% compared to the same period last year.

Every asset class suffered from the slowdown. Single-family detached starts fell the most with a 23% deceleration.

Meanwhile, Statistics Canada numbers indicated that the value of building permits issued across the Victoria CMA fell by almost 40% in October 2019, ending up at $68.7 million. This is much larger even when compared to BC’s decline of 21.2%, which was the largest provincial drop-off during that month, and far outstripped the 1.5% decrease on the national level.

However, CMHC senior analyst (economics) Braden Batch said that these figures should be viewed in light of the fact that 2017 and 2018 were “record-setting years” in terms of starts.

“[3,242 new housing starts] is actually quite a lot of housing starts for Victoria, especially if you look at a longer time scale,” Batch told Victoria News. “Basically, it is down by the amount of one or two major projects. We can easily see a major project come on line in December and that would equalize it.”

“We know that construction has to slow down a little bit,” he added, and assured that “the fundamental factors are starting to pull back. So we will expect construction to pull back as well.”

Fortunately, Victoria is enjoying a sustained acceleration in activity in its lower- and mid-end housing sectors – in turn, driving price growth in the city’s condos and single-detached homes.

“It is a challenging time for those shopping for properties in that price range as they can often find themselves in a competing offer situation,” Victoria Real Estate Board president Cheryl Woolley said earlier this month.

The benchmark value of a condo unit in Victoria grew by 3.1% year-over-year to $517,000 in November. Meanwhile, the average single-detached price fell by 1.2% to $855,400. Overall sales went up by 15.9% during the same time frame.