The NDP budget has forecasted a drop of 30% in housing starts in British Columbia for the next three years. This expected drop has sparked multiple debates on whether there will be too few units being built to accommodate the growing population of Vancouver.
The managing principal of Urban Analytics, Michael Ferreira, reported 223 completed and unsold units in Vancouver at the end of 2018. And less than 1,000 unsold units under construction or completed. These figures are “nowhere close to being an oversupply situation,” states Ferreira.
Population Growth and Housing Starts
If we compare this to the population growth of Vancouver, the number of household units is quite low. Many critics argue that when people talk about oversupply, they do not take into consideration the units being demolished, which in turn reduces the total supply. Census numbers also don’t reflect the number of foreign workers and students that move into cities like Vancouver. Such numbers have created an important secondary market for investors.
SFU professor, Andrey Pavlov, believes that we need to “look at building for population growth for the next 10 years, not just now.” According to his research, an estimated 108,000 homes were stuck in the permit approval process in 2017. There is no update information of the number for last year but clearing the 108,000 homes would ease the supply issue.
Housing starts dropped since a peak in 2016
Andy Yan, director of City Program at SFU, studied the housing starts in Metro Vancouver and found that after the plunge of 2009, the number of housing starts rose from 15,000 in 2010 to 20,000 in 2015, and climaxed at 28,000 in 2016. Since then, it has fallen to 26,200 in 2017 and to 23,400 in 2018.
The reduction in housing starts, combined with higher interest rates, will have an effect on many households that are looking into purchasing a home. “Credit is harder to obtain, as is global capital,” Yan says.
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