Annual 2001 (preliminary) and December 2001

Builders took out an estimated $39.9 billion in building permits last year, just shy of the all-time high that has stood since 1989. Construction intentions for housing broke an annual record, while non-residential permits reached a 12-year high.

This preliminary figure represented an 8.1% increase from 2000, taking the annual total just short of $40.0 billion, which was the best annual performance ever. Advances in both the residential and non-residential sectors contributed to this strong showing.

Regionally, the overall value of building permits increased in 19 of the 26 census metropolitan areas. Montreal by far showed the largest growth (in dollars), with commercial construction intentions, especially office buildings and retail trade projects, nearly double the level in 2000.

The value of building permits issued by municipalities dropped in December in the wake of a plunge in the industrial construction intentions. Builders took out $3.1 billion in permits, down 9.7% from November.

The value of non-residential building permits totalled $1.3 billion, a 15.6% decline, solely the result of a drop in industrial permits. It was the lowest monthly figure for non-residential intentions since February 2000.

Housing intentions fell 5.2% to $1.9 billion, halting four consecutive monthly gains. A substantial decline in permits for multi-family housing more than offset an increase in single-family permits. Even so, the value of residential permits in December was 1.9% above the average monthly level in 2001.

Residential: record level on an annual basis

Following strong performances in 1999 and 2000, construction intentions in the residential sector rose 8.9% to a preliminary level of $22.2 billion in 2001, a record on an annual basis.

The continued upward trend in residential permits through 2001 is mainly the result of low mortgage rates, tight vacancy rates in several centres and the high demand on the housing resale market.

The encouraging sign in 2001 was that the key portion of the housing sector- the single-family component, which represents more than 70 % of the total residential value - led the advance (in dollars). The value of single-family permits rose substantially (+8.2% to $16.0 billion); the multi-family permits followed (+10.8% to $6.2 billion).

Regionally, the overall value of residential building permits increased in 22 of the 26 census metropolitan areas. Calgary showed the largest rise (in dollars) in the single-family component, while Vancouver recorded the largest advance in the multi-family permits.

All other provinces and territories except for Nova Scotia, Saskatchewan and Nunavut posted gains in residential permits. The largest increases in dollars were in Quebec (+15.8%) and Alberta (+16.9%).

Multi-family permits plummet after four consecutive monthly gains

The value of multi-family permits totalled $418 million in December, down 30.2% from November, the first decline in these permits during the last five months. In contrast, the value of single-family permits rose 5.6% to $1.5 billion, the highest monthly level since February 1990.

Provincially, a marked decline in multi-family permits in the Toronto area led Ontario to the largest decline (in dollars) in December (-18.8% to $776 million) in the residential sector. Following a strong decline in November, British Columbia posted the largest increase (+32.5% to $260 million).

Non-residential: Highest annual figures in the 12 years

Following a strong performance in the previous four years, construction intentions in the non-residential sector kept their momentum in 2001 with a 7.1% rise to a preliminary level of $17.8 billion, the best showing since 1989.

Declining vacancy rates for office and commercial buildings, combined with a scarcity of industrial space in many centres in 2000, were factors behind higher non-residential building intentions in 2001. Others included low interest rates, good corporate profits in 2000 and higher proposed construction spending by government.

The institutional component was the main contributor to the annual growth in the non-residential sector. Institutional permits reached a record $5.0 billion, up 33.6% mainly due to the education, medical and hospital categories.

Commercial construction intentions reached $9.1 billion last year, their highest level since 1989, with a 2.2% gain over 2000, pushed largely by projects in office building category.

The industrial component halted a four year upward trend, declining 6.8% to $3.7 billion, following a 9.5% increase in 2000. This decrease was largely due to declining construction intentions for plants.

Among the provinces, the most significant growth in 2001 in dollar terms occurred in Quebec (+31.0% to $4.0 billion), powered by the booming commercial construction intentions in the Montreal area. Nova Scotia recorded the largest decline (-34.3% to $245 million), as all three non-residential components fell.

Strong drop in industrial intentions hits non-residential sector in December

The lowest industrial construction intentions since 1995 led to a strong decrease in the non-residential sector (-15.6% to $1.3 billion) in December.

Factors contributing to the recent downward trend in non-residential intentions included the lowest industrial capacity utilization since the fourth quarter of 1992 as well as climbing vacancy rate for office building in several major cities.

Following a strong showing in November, industrial permits fell 63.7% to $143 million, reflecting a large decline for plant and transportation and utility construction intentions. The largest decline occurred in Ontario (-61.4% to $67 million).

Commercial construction intentions were virtually unchanged (-0.2% to $657 million). An increase in the office building category was offset by declines in other categories. Alberta posted the largest drop (-35.6% to $110 million).

In contrast, intentions in the institutional component increased 4.7% to $456 million with the educational building category playing the largest role.

Among the provinces, Nova Scotia recorded the largest increase (in dollars) in the non-residential sector (+126.6% to $18 million) due to strong results for the commercial component in the Halifax region. The largest decrease was in Alberta, following a large increase the previous month.