Building permits

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Construction intentions hit another record high in 2006, thanks mainly to soaring demand for residential and non-residential space in Western Canada. The annual level of permits has now increased for 11 consecutive years.

Municipalities issued a record $66.2 billion worth of building permits, up 9.0% from the previous high of $60.8 billion in 2005. Construction intentions in both the residential and non-residential sectors reached new highs.

Intentions also set new records in every province, except Prince Edward Island and Ontario.

Even so, the overall picture would have been less robust without the two westernmost provinces. If Alberta and British Columbia were excluded, the overall value of permits would have increased by just 1.0%, instead of 9.0%. These two provinces showed the biggest gains for both residential and non-residential components.

In the housing sector, the value of permits surpassed the $40-billion mark for the first time, increasing 5.9% to $41.0 billion. Municipalities actually approved fewer new dwellings for the second year in a row, but the value set a record because of higher prices.

In November, the New Housing Price Index showed a 12-month increase of 11.4% in contractors' selling prices of new residential houses. Among metropolitan areas, Calgary (+49.8%) and Edmonton (+42.8%) had very high year-over-year gains.

Municipal authorities approved construction of 232,605 new dwelling units in 2006, down 2.7% from 2005. The level in 2006 was only 3.7% lower than the 241,470 units approved in 2004, which was the highest since 1987.

In the non-residential sector, the value of permits hit $25.2 billion in 2006, up 14.5% from the previous record of $22.0 billion in 2005. Gains occurred in all three non-residential components — industrial, institutional and commercial.

Regionally, the value of permits increased in 20 of the 28 census metropolitan areas in 2006. Annual gains in Calgary, Vancouver and Edmonton largely surpassed increases in all other areas, as the value of permits for residential and non-residential buildings soared in those centres.

All metropolitan areas in Atlantic Canada and Western Canada, as well as Sherbrooke, Kingston and London, set new record highs in 2006.

Except for Québec, all metropolitan areas showing a decline were located in Ontario. Toronto and Ottawa posted the largest retreats.

Housing: Demand for single-family dwellings softens

Demand for single-family dwellings softened in 2006, as the number of units approved fell to a five-year low. Municipalities approved 119,140 single-family units, down 2.2% from 2005.

Even so, the value of single-family permits jumped 6.3% to $26.7 billion in the wake of higher prices, especially in Alberta.

Demand was also off for multi-family units. Municipalities approved 113,465 multi-family units, down 3.2%, but this was still the second highest level since 1988. The value of permits for these units hit $14.3 billion in 2006, up 5.1% from 2005.

Factors contributing to the strong housing market included a dynamic economy in Western Canada, the strong level of employment, the growth in disposable income, the tight apartment vacancy rates in several centres and advantageous mortgage rates.

Non-residential sector: New highs for commercial and institutional permits

All three components contributed to the record year for non-residential construction intentions.

The value of commercial permits hit a record high of $14.4 billion, up 20.4% from 2005. It was the third annual record in a row, thanks to record values for office buildings and trade and service buildings.

The institutional component rose 3.6% to $6.3 billion, also a new record. This growth was based mainly on strong construction intentions in the education and medical categories.

Industrial construction intentions rose 13.3% to $4.5 billion in 2006, the second highest level ever, surpassed only by the record set in 1989. The main factor behind this gain was construction projects for manufacturing buildings and in the utility and transportation categories.

Increases were posted in eight provinces in 2006, with the largest gains (in dollars) occurring in Alberta (+38.5% to 5.7 billion) and British Columbia (+21.9% to $3.9 billion). Both set record highs in all three components.

Several economic factors were consistent with a fertile environment for the non-residential building intentions in 2006, including growth in consumer spending, declining vacancy rates for office buildings in several centres and the high level of corporate operating profits.

December 2006: Retreat in both residential and non-residential permits

On a monthly basis, the total value of building permits totalled $5.8 billion in December, down 7.8% from the record value of $6.3 billion in permits issued in November.

Despite the decline, this level was 3.9% higher than the average monthly level in 2006. The value of both residential and non-residential permits declined in December.

The value of housing permits fell 5.1% to $3.5 billion, the third decline in the last four months. The decline was due solely to the multi-family component, where intentions plunged 20.9% to $1.2 billion. The value of single-family permits increased 5.5% to $2.3 billion, halting three consecutive monthly declines.

In the non-residential sector, construction intentions retreated 11.7% to $2.3 billion. This decline followed four consecutive monthly gains. Intentions fell in all three non-residential components.

In the commercial sector, intentions declined 1.6% to $1.4 billion in December, the second consecutive monthly drop. A lower demand for permits for the majority of commercial categories was behind this decline. Even so, this level was 19.4% higher than the monthly average in 2006.

The value of industrial permits fell 8.0% to $457 million, on the heels of a 34.6% gain in November. The main factor was lower intentions in factory and plant construction projects.

Institutional intentions dropped 37.3% to $410 million after a large gain in November. Lower values for education and medical building permits in all provinces were behind this decline.

Provincially, the value of building permits fell in six provinces. The largest retreat (in dollars) in December occurred in British Columbia after a record month in November. Construction intentions in British Columbia hit their lowest level in eight months, with across-the-board declines in every component in both residential and non-residential sectors.

In Alberta, a surge in construction intentions for industrial and commercial buildings pushed the value of building permits to a record high of $1.4 billion.

In Quebec, very high construction intentions in the commercial sector pushed the total value of permits to $1.1 billion, the second highest level on record. It was surpassed only by the level of $1.2 billion reached in October 2006.

Available on CANSIM: tables 026-0001 to 026-0008, 026-0010 and 026-0015.

Definitions, data sources and methods: survey number 2802.

The December 2006 issue of Building Permits (64-001-XIE, free) will be available soon.

The January building permit estimate will be released on March 6.

To order data, contact Jasmine Gaudreault (613-951-6321 or toll-free 1-800-579-8533; bdp_information@statcan.gc.ca). For more information, or to enquire about the concepts, methods or data quality of this release, contact Étienne Saint-Pierre (613-951-2025), Investment and Capital Stock Division.

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