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Building permits
March 2004

Highlights

Overall construction intentions fell in March as a plunge in the value of building permits for non-residential projects far offset a gain in housing projects.

Builders took out $4.2 billion in building permits in March, down 4.2% from February.

The value of residential permits totaled $2.91 billion in March, up 4.5% from February and just below the record high of $2.95 billion set in December 2003

In contrast, the value of non-residential permits plunged 19.4% to $1.29 billion, their lowest level since April 2002. This decline was largely the result of fewer commercial and institutional projects. The non-residential sector has been showing a downward trend since July 2003.

On a quarterly basis, the residential sector’s strength drove the overall value for the first three months of 2004 up 6.2% to $12.9 billion. Between January and March, builders took out $8.6 billion worth in residential permits, up 14.6% from the same period in 2003. In contrast, non-residential permits fell 7.5% to $4.3 billion.

Regionally, the census metropolitan areas of Montreal and Vancouver led gains from 2003, thanks to the demand for new multi-family dwellings in both areas. In the non-residential sector, increases in every component contributed to the strong showing in Montreal, while for Vancouver, the gain was related only to commercial buildings. Toronto and Hamilton areas posted the biggest declines from 2003 due to drops in the value of non-residential permits.

Both singles and multi-family permits increased

Canada’s housing market remains strong, as building permits have surpassed the $2.9-billion mark for three of the past four months. This remarkable result is due to strong demand for both single- and multi-family dwellings. The value of building permits for both rose in March.

Municipalities issued $2.0 billion in single-family permits, up 5.2% from February. This halted two consecutive monthly declines since the $2.1 billion record value issued in December. Municipalities approved construction of 10,750 new single-family dwelling units in March alone.

The value of multi-family permits rose 3.1% to $928 million. Municipalities authorized 8,205 new multi-family units.

The vigorous housing market, positively affected by the very low mortgage rates, by the strength in full-time employment and by the positive consumer confidence, had direct impact on other sectors of the economy. Statistics Canada’s latest Monthly Survey of Large Retailers showed strong sales of furniture, home furnishings and electronics. Employment in the construction sector increased 23.9% from a year ago, and the ongoing construction boom in Canada and in United States continued to generate heavy demand for manufactured wood products.

Alberta posted the strongest monthly gain (in dollars) among the provinces as municipalities from this province authorized 2,085 new multi-family dwellings, a 22 years record high. Sizeable gains were also recorded in Ontario, Nova Scotia and New Brunswick.

On a quarterly basis, the value of single-family permits totaled $5.8 billion, up 9.0% from the first three months of 2003. Growth in the multi-family component was a tremendous 28.3% to $2.8 billion.

Overall, municipalities authorized a total of 57,615 single- and multi-family units in the first quarter, 5,000 more than in the same three months of 2003.

In every province, the cumulative value of housing permits was higher in 2004 than last year. The largest growth (in dollars) occurred in British Columbia and Quebec.

Non-residential intentions tumble to 23-month low

Intentions in the non-residential sector hit a 23-month low in March, the result of sharp declines in the value of commercial and institutional building permits.

The single bright spot for the sector came in the industrial component where intentions surged 30.2% to $330 million, their highest level since July 2003. This gain was driven nearly entirely by a major project in the manufacturing sector in Quebec.

After three strong months, commercial permits plunged 25.8% to $653 million, the lowest level since December 2002. The biggest decline occurred in Ontario where commercial intentions fell 38.5% to $233 million, in part the result of the drops in trade and service building projects and warehouses.

Institutional permits fell 33.9% to $311 million, also a 23-month low. Again, Ontario recorded the greatest slide, due to a broad-based contraction which included educational and hospital projects.

The non-residential sector has faced a number of mixed economic indicators. While the second half of 2003 proved generally poor for retail sales, spending has rebounded in the first two months of 2004. In contrast, wholesale sales have been generally declining since February 2003, though the automotive sector was responsible for much of the weakness. The latest Business Conditions Survey showed that manufacturers were generally uncertain about their situation heading into the second quarter of 2004.

Provincially, the largest decrease (in dollars) occurred in Ontario where the value plunged 36.9% in March to $489 million, the lowest point since February of 2000.

On a quarterly basis, municipalities have issued $4.3 billion in non-residential permits, a 7.5% decline from the same period in 2003. However, this level was still marginally ahead of the value for the first quarter of 2002.

Declines were most pronounced in the institutional sector, where first-quarter values came in 14.6% lower at $1.1 billion than in 2003. The industrial sector saw similar declines (in dollar terms), falling 18.8% to $803 million.

Only the commercial sector exhibited gains over the first quarter of 2003, edging up 1.1% to $2.4 billion.

First-quarter growth was strongest in Quebec, where permits rose 37.8% from the same quarter last year to $1.1 billion, the result of gains in all three components. In contrast, all three components declined in Ontario.