The value of building permits issued by municipalities in June was virtually unchanged from May. However, the total for the first six months of 2001 hit a 12-year high due to record levels of housing construction intentions and substantial gains in the non-residential sector.

In June, builders took out $3.3 billion worth of permits, up 0.2% from May as the residential and non-residential sectors followed opposite paths.

Fuelled by gains in both single- and multi-family dwellings, housing permits rose 6.5% from May to $1.9 billion. In contrast, intentions in the non-residential sector declined 7.6% to $1.4 billion with declines in all three components - industrial, commercial and institutional.

Between January and June this year, municipalities issued $20.1 billion in building permits, up 12.4% over the same six months last year and the highest level for the first half of any year since 1989. Gains were strong in both residential and non-residential sectors.

Housing permits reached a record high of $10.9 billion during the first six months, up 9.1% from the same period in 2000. The year-to-date level of $9.1 billion in the non-residential sector was up 16.6%.

Among metropolitan areas, the largest growth so far this year came from the Montreal region, largely due to projects for office buildings and plants. The Toronto region recorded the next largest gain, mainly on the strength of construction intentions for multi-family dwellings.

Multi-family dwelling projects behind record first half for housing

In June, the value of building permits for multi-family dwellings was up 13.9% to $623 million, following a 36.3% increase in May. Permits for single-family dwellings rose 3.3% to $1.3 billion.

Provincially, Ontario posted the highest growth in residential construction intentions for June (+13.9% to $974 million) with Quebec coming in a distant second (+10.6% to $310 million).

Several recent indicators have also demonstrated a notable strength in the housing sector. The number of housing starts went up 13.7% in June and according to the Canadian Real Estate Association, sales of existing homes in Canada's 25 major markets established a quarterly record during the second quarter of 2001. Furthermore, the prices for new homes continued to increase at a sustained pace.

The tight vacancy rates for apartments in several major centres contributed to the high construction intentions for multi-family dwellings.

The record high in housing permits for the first six months was mainly the result of a 24.0% increase in proposed projects for multi-family dwellings. This rate of growth was more than six times the increase of 3.8% in building permits for single-family housing.

At the provincial level, the most important gain (in dollar terms) for the January-to-June period occurred in Ontario (+9.6% to $5.5 billion). The next-largest gain came from British Columbia (+27.1% to $1.4 billion). Both provinces posted substantial increases in the multi-family component. On the other hand, Nova Scotia recorded the largest decline (-19.0% to $211 million).

Declines in commercial, industrial sectors

In June, permits for non-residential projects fell 7.6% to $1.4 billion, following a decline in May.

Largely the result of a decrease in the office building category, commercial projects declined 5.0% to $706 million after a sharp drop the month before. Following a strong performance in May, Nova Scotia showed the largest decrease (-74.3% to $9 million).

Led by a major decline for plants building permits, the value of industrial construction intentions dropped in June (-22.2% to $237 million).

Institutional building intentions recorded the smallest decline (-1.9% to $418 million). Increases in social service buildings and small projects were more than offset by retreats in education and governmental building permits. Alberta recorded the largest decline while Prince Edward Island recorded the largest advance.

Among the provinces, the most significant monthly decline occurred in Quebec (-17.9% to $304 million) due to a large drop in permits for plants in the Montreal region. In contrast, Ontario posted the largest increase (+10.4% to $538 million). The Toronto and Windsor areas showed strong increases in the institutional and commercial building projects.

So far this year, non-residential building intentions reached $9.1 billion, up 16.6% compared with the same period of 2000, powered by rises in all three components. Commercial building intentions recorded the largest advance (+15.1% to $5.0 billion). Permits for industrial intentions reached $1.9 billion, up 9.5%, while institutional permits were up 27.5% to $2.2 billion.

Low interest rates, good corporate profits in 2000 and higher proposed construction spending by municipalities in 2001 are consistent with the important increase shown in the cumulative figure for the non-residential sector.

At the provincial level, Quebec recorded the largest increase on a year-to-date basis (+53.1% to $2.2 billion). In contrast, Nova Scotia recorded the strongest decrease (-43.2% to $130 million) led by declines in the commercial and institutional components.