CMHC reports May’s single detached housing starts in Greater Victoria declined 39% compared with the same month last year. Starts dropped from 93 to 57, an indication that affordability continues to be a challenge, particularly since the introduction last year of the mortgage stress test, speculation tax and other government regulations inhibiting supply. The stress test demanding buyers qualify at the Bank of Canada’s posted 5 year fixed rate, now undermines affordability since banks are offering interest rates especially for ten year fixed mortgages as low as 2.99%. It’s estimated buyers lose 20% of their purchase power.
Overall starts declined from 270 last year to 199 in May this year. However, that may be a timing issue since multi-family projects have much longer approval timelines. So far, year-to-date starts are 1,396 vs last year’s 1,256. However, single detached homes appear to be on a steady decline at 233 year-to-date vs 330 last year, a 29% drop overall.