The value of building permits declined for a second consecutive month in March as construction intentions fell in both residential and non-residential sectors.

Builders took out $3.1 billion worth of permits, down 11.5% from February. Despite this retreat, the value of building permits issued in March surpassed the $3-billion mark for the eighth consecutive month.

Intentions in the housing sector dropped 13.5% to $1.7 billion, the result of reduced construction intentions for single-family and multi-family dwellings. The non-residential sector declined 8.8% to $1.4 billion, the result solely of a marked decline in commercial permits.

For the first three months of 2001, the value of building permits totalled $10.4 billion, up 14.1% over the same period in 2000. Both residential and non-residential sectors contributed to this performance, the strongest start of any year since 1990.

Regionally, the Toronto and Montreal metropolitan areas showed substantial increases on a year-to-date basis (in dollar terms), as every component in both the residential and non-residential sectors advanced. In both regions, construction intentions reached their highest level in the last 10 years for the January-to-March period.

Plunge in multi-family permits

Construction intentions for multi-family dwellings were $458 million in March, a 26.6% plunge from the peak in February. The value of building permits for single-family dwellings declined 7.4% to $1.2 billion, following a 5.6% decline in January.

Despite two consecutive monthly declines, the outlook for the housing market is positive, as full-time employment remains high, mortgage rates are attractive and there are fewer vacant multi-family dwellings on the market. Statistics Canada’s latest Survey on Private and Public Investment showed that investment in housing is expected to increase in 2001, a finding which is consistent with the higher cumulative figure for residential permits so far this year.

Provincially, the largest decline (in dollar terms) occurred in Ontario (-20.3% to $856 million), as construction intentions fell sharply for single- and multi-family dwellings. Quebec also posted declines in both single- and multi-family components (-11.6% to $256 million). On the other hand, the largest advance was in British Columbia (+4.4% to $226 million), due solely to an increase in the value of permits for multi-family dwellings.

From January to March, the value of housing permits reached $5.6 billion, up 9.4% from the same period last year and the best result for the first three months of any year since 1990. This good standing has been largely the result of a robust gain in permits for multi-family dwellings (+29.9%).

Provincially, the strongest start to 2001 occurred in Ontario (+11.8% to $2.9 billion) followed by British Columbia (+27.1% to $685 million), owing in large part to significant increases in multi-family permits in the Toronto and Vancouver metropolitan areas respectively. In contrast, Nova Scotia recorded the strongest decline (-32.8% to $91 million).

Non-residential: record level on a year-to-date basis

In March, permits for non-residential projects fell 8.8% to 1.4 billion following a decline in February. However, the cumulative value for the first three months was 20.4% higher than the same period last year.

The outlook for the non-residential sector remains positive on the whole despite a fifth consecutive quarterly decline in the Conference Board of Canada’s Index of Business Confidence. Shrinking vacancy rates in many centres, record high corporate operating profits and a high industrial capacity utilisation rate are factors that led the non-residential sector to a good start.

Commercial projects tumbled 17.4% to $753 million in March, the second monthly decrease in a row. Hotel construction intentions showed the most significant decline.

Industrial building intentions remain unchanged at $342 million in March. Losses in factory projects offset gains in all other industrial categories. The value of institutional permits increased 9.2% to $295 million due to plans for the construction of medical facilities.

Provincially, Ontario reported the largest decline (in dollar terms) in March (-23.5% to $505 million), due mainly to declines in all three components in the Toronto metropolitan area. The largest increase was in Alberta (+71.1%, to $268 million) where all three components showed increases.

Powered by rises in all three components, the cumulative value for the first three months of 2001 reached a record high of $4.7 billion. The largest advance was posted by the commercial component (+15.9% to $2.7 billion). Permits for industrial construction reached $1.1 billion, up 25.7%, while institutional intentions were up 28.5% to $933 million.

Among the provinces, the strong result in the Toronto metropolitan area led Ontario to the largest increase in the non-residential sector on a year-to-year basis (+34.4% to $2.0 billion). In contrast, Manitoba recorded the most significant decrease (-40.0% to $92.2 million).