Vancouver Island new home construction slid in February from January but total starts this year surged past the same period in 2009, reflecting a national spike amid sizzling real estate markets.
"Vancouver Island builders are responding to the strong resale market and recovering economy," Travis Archibald, senior market analyst for the Canadian Mortgage and Housing Corp., said yesterday.
Housing starts on the Island declined to 234 in February from 391 in January.
But the total of 625 starts for those two months are a 157 per cent leap compared with the same period last year, when 243 homes were started.
Last month's starts were up 216 per cent year over year. February 2009 saw only 74 new homes started on the Island, when builders and real estate buyers retreated as the financial crisis swept around the world.
Home starts on the Island this year are expected to rise above 2009 levels but remain below the five-year average, CMHC said.
Greater Victoria delivered the largest share of home starts on the Island, with 128 in February.
Langford led the way in the capital region, with 41 new homes under construction, followed by Victoria with 19 and View Royal with 15.
Across the country, new home construction rose to almost 200,000 units in February, a light at the end of the tunnel for buyers seeking relief from a red-hot sellers' market, analysts say.
Housing starts climbed 6.1 per cent in February to a seasonally adjusted 196,700 units, the highest level since October 2008, CMHC said. Those figures were driven largely by a spike in Ontario, where starts soared 28.6 per cent from the month before.
Home builders in ÎÚÑ»´«Ã½ and Ontario are racing to put homes on the market before the harmonized
sales tax kicks in on July 1, said economist Pascal Gauthier of TDEconomics.
In this province, an HST tax credit rebate will apply to new homes priced below $525,000.
Added pressure is coming from buyers concerned about tighter qualifying standards on mortgages, which take effect April 19, and higher borrowing costs expected in the second half of the year.
But February's housing starts show that supply is finally rising at the same time that demand is poised to ease, Gauthier said.
"Come the second half and into 2011, it's likely to be a friendlier environment for buyers ... just on the supply-demand balance," he said.
With the new-home supply rising and resale listings following suit, "price growth is going to soften up a bit," Gauthier said.
"If you're a buyer, you should exercise patience and look at the fundamentals. The five-year rate isn't going to shoot up 100 basis points overnight."
February's activity was led by a 243 per cent month-over-month pop in urban multiple units in Toronto, following a much lower number in January. Nationally, urban multiple unit starts -- a typically volatile segment -- grew 19 per cent.
New home construction has now roared back 76 per cent from the recession-level cyclical low of 110,000 units, said BMO Capital Markets economist Robert Kavcic.
Nevertheless, the froth in the market -- which drove up prices almost 20 per cent in 2009 and which many have warned is the beginning of a housing bubble -- seems only to have stirred more interest in buying, according to a poll released yesterday.
RBC's annual home ownership study showed the number of Canadians intending to buy a home in the next two years has risen to 10 per cent from seven per cent.
Respondents think prices will continue to rise in 2010, and their belief that housing is a good investment also climbed to a 12-year high, with more than a quarter convinced their home will be their primary source of income when they retire.
In the meantime, few expect the current level of housing starts to be maintained.
"In the second half of the year, we should observe a level of activity near the demographic needs of roughly 165,000," National Bank economist Matthieu Arseneau said.
