By Murray McNeill

Derek Thorsteinson, president of Parkhill Homes, in Royalwood showhome. Costs of land, labour and materials have all risen, pushing house prices up.

The cost of building a new home in Winnipeg is going through the roof, but the cost of land is rising even faster -- if you can find a lot.

Statistics Canada said yesterday a combination of soaring land prices, rising labour costs and higher prices for some building materials is driving up the cost of a new home in Winnipeg at a faster pace than in almost every other major Canadian city.

It said the average price of a new home in the Winnipeg Census Metropolitan Area, which includes Winnipeg and 10 surrounding bedroom communities, jumped by nine per cent from November of 2004 to November of last year -- the latest month for which figures are available.

Of the 21 cities surveyed, only two -- Calgary at 13.6 per cent and Victoria at 10.1 per cent -- recorded higher year-over-year increases, the Statistics Canada figures show.

A 7.2-per-cent jump in the cost of building a home was one of the reasons for November's big increase in new-home prices. That figure includes the increased cost of building materials and labour. But an even bigger factor was the soaring price of serviced land, which was up
nearly twice that much at 13.7 per cent over the previous year.

However, Manitoba Home Builders' Association president Garth Steek said 13.7 per cent was the average increase for Winnipeg. Some areas of the city, such as the southwest quadrant where there are virtually no new serviced lots available, saw land prices soar by much more than that, he said.

"So there's no question land is the huge driver here," he added. While Winnipeggers faced some of the biggest price hikes in the country in 2005, industry officials say it hasn't curbed the demand for new homes.

"We are as busy as we were last year at this time," said Derek Thorsteinson, president and general manager of Parkhill Homes.

The past chairman of the MHBA said although new-home prices are up, local unemployment levels remain low, mortgage rates remain attractive and the local economy is growing. All of those things are helping to keep Winnipeggers in a buying mood, he said.

New figures released yesterday by Canada Mortgage and Housing Corporation also show that housing starts in the Winnipeg CMA hit a 16-year high in 2005, with 2,586 single and multi-family starts recorded for the year.

Not only was that a four-per-cent improvement over 2004's total, but it was also the fifth consecutive year of growth, the federal housing agency added.

Leading the way was the multi-family segment of the market, which includes things like condominiums, townhouses and rental apartments. Multi-family starts hit a 17-year high of 830 units last year, which was a 37 per cent increase over 2004's total. It also more than offset a
seven per cent decline in single-family starts, which slipped to 1,756 homes from 1,882 in 2004.

"While the number of single-family homes was not as high as in 2004, this was still a respectable performance and the second-best year for family starts since 1990," said Dianne Himbeault, CMHC's senior market analyst for Manitoba.

Statistics Canada also released new building permit numbers yesterday which showed a dramatic rebound in residential and non-residential building permit activity in Winnipeg in November.

It said the value of building permits issued in the Winnipeg CMA jumped by 55.8 per cent to $126.2 million from $81.0 million in October, when the value of permits plunged by thirty per cent in the wake of a temporary dispute between local architects and engineers over who must
approve the plans for new building projects.

Winnipeg Construction Association president Ron Hambley said he wasn't surprised to hear that permit activity rebounded in November. He said most of the local construction firms he's talked to in recent weeks said they've had plenty of work in recent months.

"They're all very positive, busy and buoyant," he added.

A big reason for the November rebound was a 117 per cent increase in the value of residential permits issued in the Winnipeg CMA, thanks to several new condominium and rental-apartment projects getting underway in Winnipeg.

Himbeault and Steek said the biggest factor driving up land prices in Winnipeg is the dwindling supply of serviced lots in some areas of the city. That situation isn't expected to improve significantly until later this year, when some new building lots are expected to come on stream in
the southeast, northeast and southwest quadrants of the city.