Winnipeg housing starts slump after fees introduced
September 11, 2017
The Manitoba Home Builders’ Association (MHBA) was not surprised that Winnipeg housing starts slowed sharply this summer after posting high levels over the past six months.
According to Canada Mortgage and Housing Corp., 290 new housing starts were recorded in July in the Winnipeg Census Metropolitan Area, which includes Winnipeg and ten neighbouring municipalities.
That’s a 49 per cent drop from a year earlier, when 565 new single- and multi-family starts were recorded.
A key reason for the slump is that builders were rushing to beat a new “impact fee” on new residential projects by the City of Winnipeg, said Lanny McInnis, MHBA president.
“After May 1st, the City of Winnipeg has added a $5.09 per square foot fee to the development permit or building permit for each new housing start. On an average new home, this increases the construction cost to a homeowner by about $10,000 to $15,000. Obviously, the bigger the new home being built, the higher the impact fee being charged to the home buyer.
This has led to a huge increase in building and development permit applications being filed in Winnipeg in the months leading up to the May 1st deadline. As well, if construction has not started by November 1, 2017, Winnipeg will retroactively charge the fee on the permit. So, builders and their customers were keen to start construction as soon as possible to avoid this second deadline,” McInnis explained in a statement.
McInnes said that given the big increase in multi-family starts earlier in the year, he wasn’t surprised to see builders hit the brakes in July.
“What that tells us is that a lot of those starts did take place around that May 1 implementation of the [impact] fee,” he said.