Canada Mortgage and Housing Corporation: Strong Labour Market Drives Housing Activity

VANCOUVER, BRITISH COLUMBIA -- May 15, 2007 - British Columbia's housing sector will put in an above-average performance in 2007 as job growth keeps demand for homeownership high. Housing starts will ease this year to 34,700 units after reaching 36,443 units in 2006, according to Canada Mortgage and Housing Corporation (CMHC). Although residential construction will decline this year, 2007 will mark the fourth consecutive year in which housing starts exceed 30,000 units. Starts will ease further to 32,300 units in 2008 as mortgage rates rise and employment growth slows.

"Construction activity in the province will continue at above-average levels reflecting solid employment and income growth," said Carol Frketich, BC Regional Economist at CMHC. At a provincial level, multiple-unit housing starts will exceed 20,000 units for the third consecutive year, while single-detached starts will post a larger year-over-year decline. "This trend to denser housing forms is becoming more common in areas outside the Lower Mainland, in response to rising land costs and demand from people looking for alternatives to single-detached homes."

"Employment gains in 2007 have been concentrated in Vancouver, while the rest of the province has posted less than average growth, and this will translate into varying levels of home construction." Among the province's four Census Metropolitan Areas, Vancouver and Abbotsford will see an increase in new home construction this year, while Victoria and Kelowna housing starts will moderate from last year's levels.

CMHC's new report Housing Market Outlook, British Columbia Region Highlights, also includes forecasts for existing home markets. Existing home sales in the province, as measured by the Multiple Listing Service (MLS®), will ease to 94,500 units in 2007 and to 92,000 units in 2008. An increased supply of homes for sale will slow the pace of price growth from the double-digit growth recorded in the last three years. The rate of increase in the average MLS® price will moderate to 8.7 per cent in 2007 and 4.2 per cent in 2008. Of the province's four CMAs, Kelowna will record the largest price increase in 2007.

MyMortgageBC.com note: Although a strong labour market has driven prices up, we've seen housing starts moderate over the last 6 months.