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.