Surrey and Langley are sparking a boom in home construction in Greater Vancouver, despite rapidly rising costs of materials and a skilled labour shortage, says the chief executive officer of the Greater Vancouver Home Builders Association (GVHBA).

“Langley and Surrey are the fastest-growing municipalities right now,” says Peter Simpson.

In the first six months of this year, new-home construction jumped 107.46 per cent in Langley City and the surrounding district and 30.7 per cent in Surrey. In the Langley area, 861 new homes were built in the first six months of this year, compared to 415 in the first six months of last year.

In Surrey, 2,144 new homes were built in the first six months of this year, compared to 1,640 in the same period a year ago.

Canada Mortgage and Housing Corporation analysts predict that a total of 19,500 residential units will begin construction this year in Greater Vancouver – 25 per cent more than the 15,626 started last year and more than twice the 8,203 starts in the record year of 2000.

If the prediction comes true, Greater Vancouver will post the highest number of housing starts in a year since the 20,473 commenced in 1994.

In the City of Vancouver, new home starts rose 89 per cent to 2,567 from January to June, compared to 1,353 over the same period in 2003.

Simpson has only two words to explain why Surrey and Langley are behind the surge – land availability. Simpson notes more open space in the rural municipalities and lower land prices are drawing people to these areas.

But he does not believe that the boom will create an oversupply of new homes. Today’s increase is helping to make up for a shortage of new homes in recent years, he says.

According to GVHBA figures, an additional 9,615 full-time jobs were created by the Lower Mainland homebuilding industry during the first six months of 2004, compared to the same period last year. The total number of full-time jobs during the first six months of this year is 27,333, compared to 17,718 during the same period last year.

The figures apply to jobs on construction sites and in factories, shops and other locations where home components, such as windows and doors, are made, says Simpson.

Simpson attributes the increases in new homes and jobs across the Lower Mainland to the business-friendly B.C. Liberal government and the new jobs that it has created in other industries. Like realtors, the GVHBA chief executive cites empty-nesters who are downsizing, a surge in first-time home buyers and low interest rates as the catalysts behind new home construction.

Sales of pre-owned homes to empty nesters – who still want all of the amenities of a larger home without the landscaping chores – first-time buyers and repeat buyers who are looking to upgrade are creating a ripple effect that is producing demand for new homes, says Simpson.

“So all sectors are percolating along.”

The boom comes even though the cost of lumber has doubled since the start of the year and the cost of wood panels has more than doubled. The U.S. government is responsible for the spike in panel prices because it shipped about three years’ worth of supply to Iraq, says Simpson.

As a result, builders are facing considerable pricing pressures, which will inevitably result in the consumer paying more for a home.“It will be very hard to hold the line when the costs of the materials that they need are beyond their control,” Simpson adds.

To cope with the lack of available land and price increases, builders will get creative and, in some cases, revert to housing styles of years gone by.

“What you’re going to see in the fall and early next year is a lot of innovation,” Simpson predicts.

Freehold attached rowhouses – as opposed to strata-managed condominiums – will make a comeback. Manor houses, which look like large mansions but actually have four units combined under one roof, along with a basement, garden and garage, will also come into vogue.

So will small coachhouses on small lots downtown.

“(The property) might have a small house in front of it and the back might have a garage with a separate housing unit on top of it,” says Simpson.

Whatever style of new home is built, Simpson expects demand to remain strong indefinitely – despite high building costs.

Contending that Greater Vancouver is enjoying stable growth rather than just a demand bubble, Simpson says the only thing that will slow the market is a spike in interest rates, which he believes is unlikely.

“There’s no economic indicator on the horizon that says we’re going to grind to a stop anytime soon,” says Simpson.

According to Statistics Canada, B.C. builders applied for a record $3.1 billion worth of building permits in the first five months of this year – a 26.6- per-cent rise over the same period last year. Residential permits accounted for $2.36 billion – or 36.6 per cent – of that total.

In May, B.C. permits climbed 3.2 per cent to $579.9 million from $561.8 million.