The value of building permits issued by municipalities increased in April on the strength of substantial monthly gains in commercial and institutional construction projects. Builders took out $3.2 billion worth of building permits, up 4.8% from March.

A rebound in non-residential permits more than offset a decline in the residential sector. Non-residential intentions totalled $1.6 billion in April, up 16.6% from March, putting a halt to a two-month decline.

On the other hand, the value of housing permits declined 4.8% to $1.6 billion. This was the lowest level in the last 12 months, as construction intentions in both single-family and multi-family components slowed.

For the four-month period from January to April, municipalities issued $13.5 billion in building permits, up 14.0% from the same period last year. It was also the highest level for the first four months of any year since 1990, the result of advances in both the residential and non-residential sectors.

Most of the gain in the cumulative value came from the Toronto and Montreal census metropolitan areas. In Toronto, the increase was spread across all categories in the residential and non-residential sectors. In Montreal, the gain came largely from construction projects for office buildings and plants.

Declines in both single- and multi-family components

Building permits for multi-family dwellings in April totalled $402 million, down 13.5% from March, while construction intentions for single-family dwellings fell 1.5% to $1.2 billion. It was the third consecutive monthly decline in the value of permits for the single-family component, which represents about three-quarters of the total residential sector.

Despite this result, the housing market remains active. In April, housing starts were up 3.1%, sales of existing homes increased and the stock of vacant dwelling units was low. As well, employment levels remained high and mortgage rates advantageous.

At the provincial level, the largest decline (in dollar terms) in residential permits occurred in Ontario (-8.9% to $769 million), pushed down solely by the multi-family component. In contrast, the largest increase occurred in Alberta (+4.0% to $249 million).

For the first four months of the year, municipalities issued $7.2 billion in housing permits, up 8.4% from the same period in 2000 and the best result for any January-to-April period since 1990. This gain was powered to a large extent by advances in multi-family permits.

Provincially, the largest gain on a year-to-date basis was recorded in Ontario (+11.2% to $3.6 billion) with the majority of the growth coming from the Toronto region. In second place was British Columbia (+29.3% to $919 million) in the wake of a substantial gain in multi-family permits in the Vancouver area. Nova Scotia recorded the largest decline (-33.6% to $120 million) on a year-to-date basis.

Rebound in non-residential projects

April’s rebound in non-residential permits followed two straight monthly declines, and was led by institutional and commercial intentions.

Declining vacancy rates for office and commercial buildings in several major centres are consistent with the higher non-residential building intentions in April. Low interest rates, combined with good corporate profits last year, should have a positive impact on the non-residential sector.

Institutional intentions increased 29.2% to $387 million, the largest value since last October. Most of this activity came from education projects where the increase more than offset a decline in welfare and nursing home projects and medical hospitals. The most significant increase (in dollar terms) for institutional intentions was in British Columbia, where the value of institutional projects far more than doubled (+162.8%) to $94 million, the highest value since June 1999.

The value of commercial permits jumped 23.3% to $904 million. Recreation projects and office buildings showed the most significant increases. Ontario recorded the largest growth, +34.9% to $313 million.

Only the industrial component showed a decline in April (-9.1% to $308 million), pushed down by the utility and transportation category. Following a strong month, Alberta showed a decrease of 59.0% to $25 million. The most significant increase in this component occurred in Ontario (+18.9% to $133 million).

Among the provinces, Ontario recorded the largest increase in the non-residential sector (+21.0% to $597 million) due to strong results in the Toronto region. All three components showed gains. In contrast, following a robust gain in March, Alberta recorded the most significant decrease (-27.9% to $190 million).

Powerful start in the non-residential sector

On a year-to-date basis, municipalities issued $6.3 billion in permits for the non-residential sector between January and April, up 21.2% from the same four months of 2000.

This hefty increase was fuelled mainly by the increase in commercial construction intentions (+18.0% to $3.6 billion). Substantial increases in institutional intentions (+29.6% to $1.3 billion) and industrial permits (+22.1% to $1.4 billion) also contributed to the gain.

On a year-to-date basis, the largest increases in non-residential permits were incurred by Quebec (+60.5% to $1.5 billion) and Ontario (+28.1% to $2.6 billion). Nova Scotia (-54.1% to $81 million) recorded the largest decline.