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While high-density areas in the Vancouver region are on their way to a record year, ones like Surrey are a tougher sell, analysts say. john Lehmann

The Globe and Mail

Vancouver appears to be on its way to a record-breaking year for building new housing, as developers push to accelerate projects because of high demand and soaring housing prices.

But that isn't translating to every city in the region, with Surrey seeing markedly fewer housing starts than previous years.

Vancouver had 3,500 housing units under construction for the year up to the end of April, according to data from Canada Mortgage and Housing Corporation.

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That puts it on track to eclipse its previous record of 6,000 units by the end of 2013.

The building frenzy is contributing to what CMHC says is the highest number of April housing starts in the region since 1972.

But Surrey has dropped to about 940 this year, compared to the 1,800 it had under way this time last year.

Housing analyst Michael Ferreira said the high prices in Vancouver, combined with a high pace of development in areas that the city rezoned several years earlier, are some of the reasons behind the numbers.

"Part of it is the explosion on the Cambie Corridor and then you throw in the River District, Southeast False Creek, Mount Pleasant," said Mr. Ferreira, a principal at Urban Analytics. "In the East Fraserlands [the River District], they're accelerating because the demand for the product is there."

Mr. Ferreira said 300 condos and townhouses sold in that large southeast Vancouver development just in the past month.

While the number of starts in different cities can fluctuate if a few big projects come through the pipeline in a certain year, Mr. Ferreira said there are also some long-term trends at play.

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"It's really the urban markets where we're seeing the majority of demand," he said.

Developers, knowing they can sell more quickly and for a higher price in those markets, are focusing efforts there.

The next busiest city after Vancouver is Burnaby, with about 1,400 units in buildings under way this year compared to 400 the same time last year. Developers have been concentrating on big projects around Metrotown and Brentwood Mall, both of which have SkyTrain connections.

Coquitlam, where projects are going up rapidly around the under-construction Evergreen Line, has jumped from about 220 last year at this time to 775 housing units so far.

Mr. Ferreira said the Surrey market is a tougher sell, in comparison.

Although Surrey continues to see constant development of single-family houses, townhouses and some low-rise apartments, it isn't getting the big high-rise projects that the more urban areas are.

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"Surrey is still really struggling to attract buyers to their higher-density projects," Mr. Ferreira said. "Until the Central City neighbourhood starts to take more shape, it will be mostly investors. It's the one everybody's waiting for it to mature a little bit."

Numbers for the last several years show that Vancouver has consistently outpaced every other city in terms of housing starts, except in the four years leading up to the recession. That's even though Vancouver is a largely built-out city with little vacant land.

Surrey outdid Vancouver from 2006 to 2009, with a high of 5,700 housing starts in 2008, at a time when developers appeared to believe they could build anything anywhere and it would sell for healthy prices.

But the jump in activity means Metro Vancouver will likely see many more than the 19,000 housing starts of last year.

In spite of that, Mr. Ferreira held back from any prediction that the burst of new supply will reduce the region's spiking housing prices.

"There's so much pent-up demand," he said.

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B.C. had an unusually high number of people moving into the province in 2014: a net of 47,000 people, after accounting for those leaving. Of those, 13,000 were from inside Canada, 34,000 from international immigration.

The total was down to 31,000 for 2015, after international immigration numbers dropped to 15,000.

But, said Mr. Ferreira, the Lower Mainland is still catching up.

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