'Supply and demand' raising cost faster than in other Canadian cities
Winnipeg Free Press
Friday November 12 2004
By Aldo Santin
THE price of serviced building lots in Winnipeg is rising faster than in any other major city across Canada.
It's a situation that industry analysts say has been fuelled by the dwindling supply of available land.
"It's a question of supply and demand," said Dianne Himbeault, Canada Mortgage and Housing Corp.'s senior housing analyst for Manitoba. "There is less land available for builders, so they've been able to get more for the land."
Land prices rose 9.4 per cent in Winnipeg over the past year, said Statistics Canada analyst Susan Morris. It was the largest percentage increase of any major city. Only Ottawa, at 8.7 per cent, and St. Catharines/Niagara, at 8.2 per cent, were even close.
Garth Steek, president of the Manitoba Home Builders Association, said he believed prices had climbed even higher.
"The average price of building lots has gone up 15 to 20 per cent in Winnipeg over the past year," Steek said. "The demand (for building lots) has been extraordinary and the supply has been limited, so naturally you'll see an escalation (in prices)." Steek said the situation cries out for freeing more land for development, adding the Waverley West subdivision proposal is the quickest and easiest way to get available land on the market in a part of the city, the southwest, where new-home buyers want to live.
Winnipeg's 9.4 per cent increase in lot prices between September 2003 and September 2004 was more than twice the national average of 3.4 per cent, Statistics Canada reported this week.
In the West, land prices over the past year rose 5.3 per cent in Calgary, 3.6 per cent in Edmonton, 3.3 per cent in Regina and 3.2 per cent in Saskatoon.
Statistics Canada reported that the cost of housing over the past 12 months had gone up faster in Winnipeg (8.5 per cent) than the national average (5.8 per cent), was second in the country only to Victoria (8.7 per cent) and ahead of St. Catharines/Niagara (8.1 per cent). Winnipeg prices had even climbed faster than in Calgary (6.0 per cent) and Edmonton (4.0 per cent).
Steek said the average price of a new home in Winnipeg is $238,000, adding the average price of a new home in the Fort Garry area is $260,000.
He said lot prices in Winnipeg now are $1,200 per frontage foot, adding that puts the cost of a 50-foot-wide lot at $60,000. He said he expects those prices to climb as the city's inventory of available lots is taken up. But CMHC reported two weeks ago that it expects the higher prices and climbing interest rates will have a chilling effect on Manitoba's new-home market, with fewer houses built next year.
Steek said most new-home buyers prefer to live in the city's southwest quadrant, adding if the city doesn't approve the Waverley West proposal, buyers will likely opt for a new house north of the city.
He said he expects demand for new homes to increase over the next few years with the arrival of several big-ticket capital projects, including the floodway expansion, a new Manitoba Hydro dam in the north, and a new freshwater treatment plant for Winnipeg.
"There is a potential for $10 billion to $12 billion in new capital projects," Steek said. "Those kinds of projects will attract many highly paid professionals to this area and they'll want to live in accommodations that befit their salary."