Municipalities issued $45.9 billion in building permits in 2002, breaking the previous annual record ($40.0 billion) set in 1989. The feverish demand right across the country for new housing was the cornerstone of this exceptional year. Non-residential construction intentions, due to their sluggishness at the beginning of the year, were below 2001 level.

Last year's $45.9 billion annual (preliminary) total was a 16.0% increase from 2001 and a seventh straight annual increase in overall construction intentions.

The value of residential permits totalled $29.0 billion in 2002, up 32.1% from 2001, fuelled by strong increases for both single- and multi-family dwellings. For the first time since 1989, the 200,000-units mark was surpassed for a single year, as the municipalities authorized the construction of 212,400 new dwelling units in 2002.

The value of non-residential permits retreated to $16.8 billion in 2002, down 4.1% from 2001, as record intentions for institutional construction partly offset significant declines in the industrial and commercial components.

Regionally, Toronto and Vancouver led the pack in terms of annual growth (in dollars). Both were powered by vigorous construction intentions in the residential sector. Twenty-five of the 28 metropolitan areas showed increases from 2001.

In December, the value of building permits declined for a second consecutive month, down 3.2% to $3.8 billion. Non-residential building permits dropped 14.8% to $1.4 billion as the commercial and institutional components retreated. Residential permits remained high, however, increasing 4.6% to $2.5 billion, as both single- and multi-family components gained ground.

Residential sector sets a flood of new records

In 2002, permits for single-family dwellings (which represent more than 70% of the residential sector) totalled $20.9 billion, 32.0% above the value reached in 2001. The increase came from feverish demand for new single-family dwellings and from the rising cost of building these new units. The number of these new units authorized totalled 127,450, 29.0% more than the year before, while the average estimated construction cost increased 4.7%.

The value of multi-family permits advanced 32.3% in 2002 and totalled $8.1 billion. Gains came from all type of multi-family dwellings-semi-detached (+8.3%), row house (+39.0%) and apartment (+38.8%).

These tremendous results arose from the alignment of several factors. The highest annual growth rate in employment since 1987, the very low mortgage rates, the scarcity of dwellings available for rent or sale, and rising disposable income all combined to create exceptional conditions that pushed consumers toward the new home market.

All provinces, territories and metropolitan areas showed growth in residential construction intentions in 2002. The four eastern provinces, Quebec, Ontario, Alberta and the Northwest Territories all set new annual highs in terms of value. As well, 14 metropolitan areas reached new annual peaks in the residential sector. These are good indications that the housing boom hit every part of the country.

Single- and multi-family permits both up in December

The value of single-family permits totalled $1.8 billion in December, up 5.1% from November, the fourth monthly increase in five months. Also climbing, multi-family permits rose 3.1% to $685 million.

Among the provinces, the largest increases (in dollars) in the residential sector in December occurred in British Columbia (+22.1%) and Alberta (+14.2%). In Alberta, December's $451 million was higher than the previous peak ($427 million) reached in July 2002. By contrast, December's largest drop was in Quebec (-10.3%), a third consecutive monthly decline.

Non-residential posts second highest annual figures in 13 years

Despite a 4.1% drop, the non-residential sector recorded its second highest annual value in the last 13 years, reaching $16.8 billion. Record institutional intentions partly offset significant declines in the industrial and commercial components.

The institutional was the only component recording an annual increase within the non-residential sector. Institutional permits reached a record $5.5 billion, up 8.5%, driven mainly by the social services and educational categories.

For Ontario, the double-cohort entering their first year of university or college is reflected in the province's higher institutional construction intentions. As well, Quebec reached a record high in 2002, due to increased construction intentions in the educational category.

Commercial intentions fell for a second year in a row in 2002, down 8.4% from 2001 to $8.1 billion. Mainly, the decline was due to fewer projects in the office buildings category. Office vacancy rates were higher in 2002, while the commercial vacancy rates fell in many centres in 2002 as retail sales improved. The higher construction intentions seen in 2001 for office buildings may have stalled demand for this type of building.

The industrial component dropped 11.1% to $3.2 billion, the lowest level since 1996. A strong drop in the manufacturing plant category caused this decrease, as fewer large projects were planned.

Fourteen of the 28 census metropolitan areas posted annual decreases in the value of their non-residential permits. The largest decline occurred in the Montreal area, followed closely by Toronto. Both areas were down from last year, mainly because of fewer construction intentions in the office buildings category. The strongest increase was in the St-Catharine-Niagara metropolitan area, where the restaurant and hotel category turned in large growth.

Among the provinces, Quebec posted the largest decline (-13.7% to $3.4 billion), as decreases in the industrial and commercial components more than offset an increase in the institutional component. By contrast, the most significant growth in 2002 in dollar terms occurred in Ontario (+8.3% to $7.8 billion), leading to that province's highest annual value since 1989.

Non-residential sector hit by a strong drop in commercial intentions in December

The lowest commercial construction intentions since January 1998 pushed the non-residential sector sharply lower in December (-14.8% to $1.4 billion).

Following a strong November, commercial permits fell 22.8% to $556 million. The fall was seen in all construction categories except service stations. The largest loss occurred in Ontario (-45.3% to $173 million).

After two monthly spikes upward, the value of permits for institutional projects dropped 17.2% to $508 million, largely because of decreases in the social services and medical categories. Ontario recorded the largest decline (-36.1% to $241 million), following a record high in October and a virtually unchanged value in November.

Intentions in the industrial component increased 12.8% to $295 million, reflecting a large increase in the manufacturing plant category. Mainly, the lift came from a large project in Saskatchewan.

Among the provinces, decreases in the commercial and institutional components led Ontario to the largest drop in December in the non-residential sector (-31.6% to $572 million). Conversely, a large gain in the industrial component led Saskatchewan to December's strongest increase (+151.7% to $72 million).