64-001-XIE
Building permits
December 2004

Highlights

Annual 2004 (preliminary) and December 2004

For the second straight year, Canadian municipalities have issued a record high level of building permits as the demand for new dwellings soared across the nation in 2004.

The new record of $55.4 billion was 9.1% higher than the previous high of $50.8 billion set in 2003.

The annual level of permits has now increased for nine straight years. Overall construction intentions reached new peaks in every province except Prince Edward Island and Saskatchewan.

Permits in the housing sector totalled a record $36.7 billion, up 14.7% from the previous peak in 2003. There were strong advances in both single and multi-family dwellings components.

Municipalities authorized the construction of 240,640 new dwelling units last year, up 18,095 from 2003. It was the highest number since 1987 when 248,700 new units were approved.

In contrast, non-residential construction intentions last year were just shy of the all-time high in 2003, a result of sluggishness at the beginning of the year.

The value of non-residential building permits totalled $18.7 billion, down a slight 0.4% from 2003. Strong gains in the commercial component were offset by declines in industrial and institutional intentions.

The largest growth in dollars occurred in Quebec and British Columbia, which was due mainly to vigorous activity in Montreal and Vancouver. These two centres recorded the largest increases (in dollars) among the metropolitan areas.

Montreal’s exceptional performance was the largely the result of the buoyant demand for new single- and multi-family dwellings. In Vancouver, the gain came from several projects for new multi-family dwellings and from strong growth in the non-residential sector.

On a monthly basis, the year ended on a strong note in December as the value of building permits hit $5.1 billion, up 1.6% from November. It was the third consecutive monthly gain. December’s monthly intentions were the second highest on record, surpassed only by the $5.4 billion level last June.

The value of housing permits increased for a third consecutive month in December on the heels of strong demand for single-family dwellings in Ontario. In total, housing permits were up 8.2% to $3.4 billion.

In the non-residential sector, the value of permits declined 9.4% to $1.7 billion as the industrial and institutional components retreated significantly.

Strong demand for both single- and multi-family dwellings

Builders took out $24.8 billion worth in single-family permits in 2004, up 12.6% from 2003. Municipalities approved a total of 130,045 new single-family units, 7,620 more than in 2003.

In the multi-family component, intentions totalled $11.8 billion, up 19.2%. Municipalities approved construction of 110,595 new multi-family units, an increase of 10,475.

Multi-family dwellings accounted for 46.0% of all new dwelling units authorized in 2004, up from 45.0% the year before. Between 1996 and 2002, this proportion varied between 38% and 41%.

Last year’s strong performance in the housing sector was attributable to low mortgage rates and their positive impact on affordability. Other factors include gains in full-time jobs, strong consumer confidence and tight vacancy rates for apartment in large centres such as Vancouver and Montreal.

Non-residential sector: Second highest annual value ever

Only the commercial component recorded an increase last year. Commercial permits reached a record $10.1 billion, up 8.6% from 2003, mainly the result of gains in the office and recreation buildings categories.

Institutional intentions fell 12.4% to $5.1 billion, mainly because of fewer projects in medical, educational and social services buildings categories.

Industrial intentions declined 4.0% to $3.5 billion because of a strong drop in the manufacturing plant category as fewer large projects were planned.

A number of factors had an impact on non-residential results last year. First, historically low interest rates seemed to maintain their stimulating effect throughout the year. However, investors had to contend with higher construction costs, which added an upward pressure on the amounts invested.

An overflow in demand from the residential sector associated with the increase in material costs played a role in the rise in construction costs. In addition, an increase in retail sales appeared to encourage retailers to plan expansions.

Among the provinces, Ontario posted the largest decline (-3.0% to $8.7 billion) due to a drop in industrial and institutional components. The most significant growth in dollar terms in 2004 occurred in British Columbia where intentions rose 10.0% to $2.1 billion, leading to that province’s highest annual value since 2001.

Fourteen of the 28 census metropolitan areas posted annual declines in the value of their non-residential permits. The largest decline occurred in the Hamilton area, mainly because of lower construction intentions in the medical and educational categories. The strongest increase was in the Vancouver area, where trade and service and recreation categories turned in large growth.

December: Record intentions for single-family dwellings

On a monthly basis, municipalities issued a record high $2.5 billion in the value of permits for single-family dwellings, up 27.1% from November. This was 15.7% higher than the previous peak of $2.2 billion in August.

In contrast, the value of multi-family permits declined 24.4% to $863 million.

The strong results in the residential sector in Ontario contrasted with the declines in every other province, except for Prince Edward Island.

In the non-residential sector, intentions fell 9.4% to $1.7 billion in December after a jump in November.

Only the commercial component showed an increase in the level of permits in December. Commercial intentions hit $920 million, up 3.3% from November, driven mainly by the office building category. In Ontario, which recorded the largest increase for this component, permits totalled $442 million, up 12.9%.

Institutional intentions fell 17.7% to $474 million in December after recording a large gain in November. The education and social services buildings categories were the largest contributors. Ontario recorded the largest decrease in dollar terms for this component (-33.3% to $222 million).

After recording three monthly increases, intentions for industrial construction plunged 25.9% to $292 million, with manufacturing buildings showing the biggest decrease. Quebec recorded the largest drop (-59.9% to $31 million) followed closely by British Columbia (-62.2% to $26 million), both the result of a decline in the manufacturing category.

Among the provinces, weaknesses in all components gave Quebec the largest drop in the non-residential sector (-40.0% to $197 million) in December. Conversely, a 69.4% gain in the institutional component pushed British Columbia to December’s strongest increase.