Residential construction investment

The total value of residential construction investment was $20.3 billion in the third quarter, up 3.2% from the third quarter of 2004. This growth rate, the lowest since the first quarter of 1999, reflects a moderate slowdown in residential construction.

Total residential construction investment since the beginning of 2005 was $54.8 billion, 5.8% more than the total for the first nine months of 2004.

Spending on new housing construction totalled $10.5 billion in the third quarter, up 2.2% from the same period in 2004. A sharp increase in investment in new apartments/condominiums (+15.1% to $2.2 billion) more than offset a decline in investment in new single-family homes, which fell 2.5% to $6.7 billion.

The substantial rise in spending on apartment/condominium construction is attributable to an increase in housing starts and an increase in the average price per unit.

The drop in investment in new single-family homes is due to a shift in demand toward more affordable housing units (multiple dwellings). This is the first time since the first quarter of 1999 that construction spending on new single-family homes has decreased relative to the previous year.

However, overall housing demand continues to be bolstered by factors such as low mortgage rates and their positive impact on affordability, and high employment levels.

Spending on renovations, the second-largest component of residential construction investment, totalled $7.9 billion in the third quarter, up 5.7% from the same period in 2004. This component benefited from the heavy activity in the resale market. Acquisition costs edged down 1.5% to $1.9 billion.

At the provincial level, Alberta (+22.2%) and British Columbia (+12.3%) posted much larger gains than the other provinces as a result of significant increases in all three components of residential construction investment. Quebec had the largest decline (in dollar terms) due to a substantial drop in spending on new housing construction.

Note: Residential construction investment is divided into three main components. The first is new housing construction, which includes single dwellings, semi-detached dwellings, row housing and apartments, cottages, mobile homes and additional housing units created from non-residential buildings or other types of residential structures (conversions). The second component of residential construction investment (renovations) includes alterations and improvements in existing dwellings. The third component is acquisition costs, which refers to the value of services relating to the sale of new dwellings. These costs include sales tax, land development and service charges, as well as record-processing fees for mortgage insurance and the associated premiums.

Because ownership transfer costs are not included in the investment totals presented in this release and in CANSIM table 026-0013, the figures here do not match the figures published in the National economic accounts (CANSIM table 380-0010).

Available on CANSIM: table 026-0013.

Definitions, data sources and methods: survey number 5016.

For more information, or to enquire about the concepts, methods or data quality of this release, contact Étienne Saint-Pierre (613-951-2025; bdp_information@statcan.gc.ca), Investment and Capital Stock Division.