Aug 11 2005
Shortages of serviced lots and associated rising costs have become critical problems that are expected to push new home prices up in much of the country, according to a new national survey.
The Spring/Summer 2005 semi-annual Pulse Survey of new home builders and renovators, conducted by the Canadian Home Builders' Association (CHBA), shows concern over these problems has grown across the country during the last year.
Nationally, 36 per cent of respondents rate the shortage of serviced lots a critical concern, up from 28 per cent a year ago. And 39 per cent said rising costs, due to the price of serviced lots, is a critical problem, up from 33 per cent last year. In Manitoba and Saskatchewan, 60 per cent of respondents cited the shortage of lots, and 40 per cent called increasing lot prices a critical problem. In Ontario, the numbers were 49 per cent for the availability of lots while 56 per cent cited rising lot prices.
Rising costs due to higher development charges are a critical concern to nearly a third of respondents nationally.
In Ontario, it is critical for 45 per cent. Looking ahead, about nine in 10 new home builders said they expect the costs of serviced lots and raw land to increase over the next year. The survey found that 78 per cent expect single-detached house prices will rise. Higher prices are widely expected in all provinces except Quebec and the Atlantic region.
Nationally, new home builders expect the trend towards higher costs will continue. Over the next year 67 per cent expect to pay higher development charges, while 79 per cent predict higher costs for trades and labour, 51 per cent expect lumber costs to rise, and 68 per cent expect the cost of other building materials to rise. The new Pulse survey reports that new home builders expect total housing starts to moderate this year, to 221,000, from last year's 17-year high of 233,431 units.
They forecast 210,000 starts next year. These figures are still well above the average levels of the latter 1990s.
The lower national forecast for this year is mainly due to results in Ontario (down from 85,100 in 2004 to 80,000 forecast for 2005), and in Quebec (down from 58,400 in 2004 to 50,000 forecast for 2005). Starts in Saskatchewan, Alberta and British Columbia are all expected to rise slightly this year from last year's numbers. Slight declines are predicted in the Atlantic region. The survey reflects continued strong activity in the renovation sector. About half of CHBA renovator members reported higher activity over the past year and predict further increases over the next. Strong interest is reported in energy-efficient and/or environmentally friendly features in new homes.
Forty-one per cent of new home builder members said they plan to incorporate more of those features in their homes over the next year. Leading the way are builders in British Columbia, 57 per cent, and Alberta, 51 per cent.
The most common changes planned are more energy-efficient windows, higher efficiency furnaces and water heaters, lower water consumption toilets and increased air tightness.