The value of building permits for the first 10 months of 2003 is still well ahead of last year’s pace despite declines in intentions in October in both residential and non residential sectors.

Builders took out a total of $4.3 billion worth of permits in October, down 4.9% from September.

Housing permits fell 3.3% from September’s record level to $2.8 billion, the result of a drop in intentions for both single- and multi-family dwellings.

The value of non-residential permits declined 7.7% to $1.5 billion, their lowest level since March. This was a result of decreases for industrial and institutional projects.

However, prospects are good for an exceptional year. On a year-to-date basis, total intentions were up 8.9% compared with the first 10 months of 2002 to $42.6 billion. Municipalities have issued $26.4 billion worth of housing permits, up 7.2%, while the value of non-residential permits has increased 11.8% to $16.2 billion.

Regionally, the largest advance in the value of construction intentions so far this year occurred in Toronto, where gains came from industrial and commercial projects. Montreal was close behind, the result of feverish demand for new housing. The metropolitan areas of Oshawa, Quebec City and Winnipeg have also posted sizeable gains.

Both single- and multi-family permits pull down residential sector

Municipalities issued $1.93 billion in permits for single-family dwellings in October, down 2.1% from the record $1.97 billion set in September. Construction intentions for multi-family dwellings followed a similar path, declining 5.9% to $885 million.

However, intentions in both sectors remained well above this year’s average monthly value.

Several conditions favour the new housing market this year, including advantageous mortgage rates, growth in employment, the low stock of available dwellings on the market and a high level of consumer confidence.

Provincially, the largest drop in October occurred in Ontario (-9.6% to $1.2 billion) as the value for both single- and multi-family permits retreated. This decline was partly offset by strong gains in Quebec and Alberta. The value of housing permits in Alberta hit its highest level since January.

Between January and October this year, the value of single-family permits has totalled $18.3 billion, up 3.8% from the same period in 2002. Despite this gain, 102,375 new single-family dwelling units have been authorized since the beginning of the year, 4,475 fewer than last year.

For multi-family permits, the value of intentions so far this year has reached $8.2 billion, up a substantial 15.8% from the first 10 months last year. So far this year, 85,500 multi-family units have been authorized, up 12,625. For this type of dwelling, the increase in demand was the driving force behind the gain.

At the provincial level, the largest growth by far on a cumulative basis occurred in Quebec, where the total value of residential projects ($5.4 billion) was more than $1 billion higher than the total in 10 months last year. British Columbia also showed substantial gains.

Industrial, institutional permits suffer declines

Builders took out fewer institutional and industrial permits in October, while the value of commercial permits held steady.

Institutional permits fell 19.5% to $421 million, their lowest level in seven months. A decline in demand for education and social service buildings in British Columbia offset gains in September. As a result, institutional permits plunged 71.5% to $27 million, the largest drop among the provinces.

The industrial component fell 8.8% to $232 million, the third consecutive monthly decline. It was the lowest level since March 2002. Lower demand for permits associated with utilities and manufacturing buildings in Ontario precipitated this drop.

Permits for the commercial sector showed continuing strength, holding steady at $821 million. This was the highest level since the record set in January this year. Demand for commercial permits in Ontario was particularly strong (+33.3% to $444 million) as construction intentions for trade and services buildings increased.

Among the provinces, Ontario showed the greatest gains in non-residential permits in October (+11.8% to $803 million). It was the province’s highest monthly value for non-residential intentions since February. Increased demand for commercial permits more than offset declines in the industrial and institutional sectors. The strongest decline occurred in British Columbia (-50.1% to $122 million).

Seventeen of 28 census metropolitan areas recorded monthly declines in the value of non-residential permits. Toronto experienced the greatest monthly growth, the result of the highest monthly value of permits for trade buildings issued since August 1989. Oshawa recorded the strongest declines.

For the first 10 months of this year, the commercial sector has experienced the greatest gain, increasing 9.5% from the same period last year to $8.0 billion. Permits for institutional projects have risen 11.6% to $5.1 billion, while intentions in the industrial sector are up 18.4% to $3.2 billion.

The non-residential sector has seen mixed signals from recent economic indicators. The US economy is growing at its fastest pace since the first quarter of 1984. However, Canadian merchandise exports slipped 1.4% in the first nine months of 2003 compared to the previous year. Statistics Canada’s Business Conditions Survey for October noted that manufacturers were generally positive about fourth quarter prospects although they had misgivings over high product inventories and low levels of unfilled orders.

On a year-to-date basis, Ontario recorded the biggest growth in non-residential permits (in dollars), rising 9.4% to $7.7 billion. The gain was mainly the result of rising industrial intentions. Strong growth in all three non-residential sectors propelled Quebec to the second highest gain (+15.5% to $3.2 billion).

Among provinces, only Newfoundland and Labrador and New Brunswick have failed to surpass year-to-date values from 2002.