Muncipal strike means higher prices for homebuyers

(CBC) - A strike by municipal employees is expected to increase the already-high cost of buying a home in Vancouver as developers move to pass on their rising costs to consumers.

With the strike entering its second month, anyone wanting to buy a new home can expect a five per cent to 10 per cent hike in prices, said Jon Stovell a general manager with Vancouver property developer Reliance Holdings Ltd.

Stovell said this is because the strike is preventing developers from securing city hall approval for key building permits, putting many new projects in limbo and costing the developer.

"The developer is forced to pass those costs on because they have to have certain levels of profits or they won't be able to get financing from the banks," said Stovell.

He said most key building permits require city approval and, at this point, some projects are folding, while others are on hold.

Maureen Enser, an executive director with the Urban Development Institute in Vancouver says there is a ripple effect throughout the economy. Constructions crews and staff working on each project will soon have to be let go.

Enser says smaller developers are losing about $20,000 per day, while larger ones are taking around $35,000 in daily losses.

"If we don't see an end in sight in short period of time everyone needs to be alarmed," she said

Every prudent developer budgets a contingency fund to deal with problems like this, but now Enser says those funds are running on empty.

More than 6,000 city employees represented by three CUPE locals are into their fifth week off the job.