HST contributing to double-digit decline in B.C. housing starts

The number of B.C. housing starts fell 13.3% in July, according to data released Tuesday morning by the Canada Mortgage and Housing Corporation (CMHC). The number of starts fell to 1,817 in July, down from 2,096 in June. The most significant decline was in Metro Vancouver with a 10% decline to 1,124 units from 1,250 in June.

From a seasonally adjusted basis, B.C. housing starts fell 14.8% in July, slipping to an average annual rate of 20,100 from 23,500 in June. The average annual rate in Metro Vancouver fell to 12,900 units from 14,100.

CMHC senior market analyst Robyn Adamache said in an interview, “The decline is not huge, but it’s pretty much what we had been expecting in terms of some moderation in the market going forward. People are expecting mortgage rates to go up a bit and sales in the resale market have slowed a bit.”

Other urban regions in the province with declines last month included Kelowna, Victoria, Kamloops and Nanaimo.

Nationally, the number of housing starts fell 1.6% in July to 189,200 units from 192,300 units in June. An RBC Economics report noted this is the third consecutive monthly decline, although, the dip was less than the decline expected by analysts.

The report noted that housing starts were largely concentrated in the two provinces that introduced the HST in July: B.C. and Ontario. It suggested that a rising interest rate environment coupled with the increased real estate sales costs due to the HST would continue to weigh down new-home construction. It forecasts a 9.5% decline in average monthly housing starts for the remainder of the year.

Source: BIV Business Today


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