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64-001-XIE
Building Permits
January 2002

Highlights



The momentum from last year's record level of building permits for housing has spilled over into January 2002. Builders took out permits for $2.4 billion worth of housing construction, a 24.9% increase from December, the best monthly performance since January 1990.

The increase was fuelled by gains for both single- and multi-family dwellings. Municipalities issued a record $22.0 billion in residential permits last year.

Permits for non-residential construction also rose, but to a lesser extent. The value of non-residential building permits increased 6.8% to $1.4 billion.

In total, municipalities issued $3.8 billion in building permits, a 17.4% increase from December and the highest monthly figure in the last 12 years.
This value was also 3.2% higher than intentions in January last year.

January's level of housing permits was 23.1% ahead of intentions in January 2001. However, non-residential permits in January were 18.7% below the same month last year.

Among the metropolitan areas, the strongest start in comparison with last year (in dollars) occurred in Edmonton and Calgary where in both areas, the residential sector played a key role. While 22 out of 26 metropolitan areas posted a better start than last year in the residential sector, 17 of them were behind January 2001 level in the non-residential sector.

Record high intentions for single-family dwellings

Builders took out $1.8 billion worth of permits for single-family dwellings in January, breaking a 12-year-old record. This 24.6% gain over December was the eighth monthly increase in single-family permits during the last nine months. New single-family dwellings accounted for more than 90% of this value; the remainder related to planned renovations.

Following a sharp drop in December, the value of multi-family permits rebounded with a 25.8% increase in January to $561 million, powered by gains for semi-detached and row houses.

Several factors helped push up the value of residential permits, including low mortgage rates and their positive impact on the housing affordability, the high level of immigration and the tight vacancy rates for apartments in several centres. This is in line with other housing indicators which also indicated a strong start for the housing market in 2002. The number of housing starts increased 17.3% in January, while sales of existing homes in Canada's 25 major markets were up 12.0 %.

Ontario was by far the largest contributor (+41.2% to $1.1 billion) to the strong rise from December as both single- and multi-family permits posted substantial advances. Alberta (+19.3%) and Québec (+16.2%) followed far behind. For all three provinces, as well as New Brunswick, January's residential figures were the highest during the last decade. The largest decline occurred in Nova Scotia (-7.7%), following high construction intentions in December.

Commercial, industrial permits fuelled non-residential gain

Permits for proposed industrial and commercial projects fuelled the 6.8% gain in non-residential intentions in January.

Builders took out $242 million worth of industrial permits, a 55.2% rebound from December; all categories increased except factory and plant. The largest increase in industrial permits was in Quebec (+214.6% to $81 million).

Permits for commercial construction rose 18.1% to $783 millions, due largely to recreation buildings and increases in minor projects. British Columbia posted the most significant increase as commercial projects more than doubled.

Intentions in the institutional component declined 21.9% to $408 million, with education showing the greatest loss. Despite this decline, the institutional component continues to show an upward trend. Alberta recorded the largest decrease in the institutional component (-81.4% to $13 million).

A strong increase in commercial intentions in the Vancouver area led British Columbia to the largest gain in the non-residential sector (+65.4% to $152 million). Alberta recorded the largest monthly decrease (-13.6% to $189 million) for the second month in a row.

Despite the increase in January, several indicators help explain the continuing downward trend in the non-residential sector. According to Statistics Canada's Business Conditions Survey, only 17% of manufacturers remained positive about the prospects of increasing production in the first quarter of 2002. Declining corporate operating profits in 2001 and industrial capacity utilization rates may have hurt the sector. In addition, non-residential construction activity is expected to decrease this year, according to private and public investment intentions released on February 27, 2002.

Non-residential intentions marked their slowest to the year start since 1999. January's total of $1.4 billion was down 18.8% from January 2001. The decline was driven by two components: industrial (-39.2%) and commercial (-22.2%). Proposed institutional projects were 13.5% higher in January compared with a year earlier.

Ontario (-29.5%) and Quebec (-21.6%) were well behind non-residential levels in January last year. The largest increase was in Alberta (+18.5% to $189 million), due largely to a strong increase in the Edmonton region.



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