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March 2008
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Analysis – March 2008
Construction intentions in Canada continued to cool. As a result of a marked decline in Alberta, the total value of building permits in Canada dropped 4.5% in March to $5.6 billion. This was the fourth decrease in five months. Both residential and non-residential sectors declined in March.
The total value of permits reached $17.3 billion for the first quarter of 2008, down 8.2% from the fourth quarter of 2007 and a third consecutive quarterly retreat.
Construction intentions continue to soften in the housing sector
In the residential sector, the value of building permits decreased 5.7% to $3.6 billion. This was the second lowest value in 13 months. It was generated by drops in values of both multi-family (-7.8%) and single-family (-4.4%) permits.
The number of multi-family units approved increased 4.6% while single-family units decreased by 8.5% in March. This was consistent with a general tendency observed over the last five years, where the demand has shifted from the more expensive single-family dwellings toward the more affordable multi-family units. The overall number of residential units approved has been on a downward trend since the summer of 2007.
Note to readers
Unless otherwise stated, this release presents seasonally adjusted data, which ease comparisons by removing the effects of seasonal variations.
The Building Permits Survey covers 2,400 municipalities representing 95% of the population. It provides an early indication of building activity. The communities representing the other 5% of the population are very small, and their levels of building activity have little impact on the total.
The value of planned construction activities shown in this release excludes engineering projects (e.g., waterworks, sewers or culverts) and land.
For the purpose of the Building Permits release, the census metropolitan area of Ottawa–Gatineau is divided into two areas: Ottawa–Gatineau (Quebec part) and Ottawa–Gatineau (Ontario part).
Industrial and institutional permits pull down the non-residential sector
The value of non-residential permits fell 2.4% to $2.0 billion, a level not seen since April 2007. Intentions peaked for this component in May and June last year.
On the industrial side, the value of permits plunged 21.9% to $318 million, the third decline in four months and the lowest level since February 2007. This result was fuelled by declines in projects for utility buildings.
Following a 32.3% drop in February, the institutional component fell 4.7% to $454 million, mainly as a result of a decline in projects for medical buildings.
In the commercial component, the value of permits increased 5.3% to $1.2 billion, as a result of increases in various types of buildings such as warehouses, hotels, restaurants, recreation buildings and retail and wholesale stores.
Overall, the value of permits in each of the three non-residential components has been on a downward trend since the last part of 2007.
Four provinces post declines in their value of building permits
Alberta recorded the largest reduction in March (-32.9%) among the provinces. This decline had a significant impact on the overall results. Excluding Alberta, the value of building permits would have increased by 5.1% instead of declining 4.5% nationally. With marked retreats in both residential and non-residential sectors, the total value of construction intentions was below the $1 billion mark for the first time in 13 months.
The cumulative value of permits for the January-to-March period in Alberta totalled $3.7 billion, down 3.8% from the fourth quarter of 2007 and a third consecutive quarterly decline. This result was 19.2% lower than the peak recorded in the second quarter of 2007.
Newfoundland and Labrador, New Brunswick and Manitoba also recorded reductions in March.
The most significant gain (in dollars) occurred in Ontario (+7.3% to $2.1 billion), as a rise in construction intentions for multi-family dwellings more than offset a fifth decrease in six months in the non-residential sector.
Saskatchewan and Quebec also posted sizeable gains, thanks in large part to non-residential permits.
Furthermore, in Saskatchewan, the value of residential permits in March was just 1.1% below the record of $96 million reached in December 2007. The robust demand for housing in Saskatchewan is positively affected by a dynamic economy and strong interprovincial migration. In Quebec, the value of housing permits dropped to $647 million, a 13 month low.
While the total value of permits increased in British Columbia and Nova Scotia, the level remained almost 10% below the average monthly level in 2007 for both provinces.
The demand for new dwellings falls in Calgary and Montréal
Overall, 11 out of the 34 census metropolitan areas showed a decline in March. The largest retreats (in dollars) were recorded in Calgary, Edmonton and Montréal.
In Calgary, the decline came in large part from the residential sector. The number of new units approved in March (692) was at its lowest level since July 2000.
In Montréal, the 1,536 new residential units approved represented the lowest number on record since December 2002.
In Edmonton, the decline came from a retreat in the non-residential sector after this component reached a near record level in February.
In contrast, the total value of permits in Kitchener reached a record high of $144 million, thanks to strong results in both residential and non-residential components.
