Building permits

The value of building permits declined in May, as institutional intentions plummeted and construction intentions for single-family homes hit a 17-month low. Builders took out $3.9 billion worth of building permits, down 2.0% from April.

Municipalities issued $2.4 billion in permits for housing, as demand for multi-family dwellings pushed the total value of residential permits up 0.8%. In contrast, the value of permits for the single-family component fell for the fourth straight month.

In the non-residential sector, the value of permits fell 6.2% to $1.5 billion, as declines in permits for government and commercial projects offset an increase in industrial intentions.

Despite month-to-month fluctuations this year, Canada's building sector is still performing strongly. On a year-to-date basis, the value of permits in all major components was higher than during the same five-month period in 2002. In total, municipalities issued $19.7 billion in permits from January to May, up more than $1 billion from the same period of 2002.

Provincially, the value of permits recorded the biggest decline in Manitoba, where intentions fell 63.3% to $79 million after surging in April as a result of two new hospital projects. Quebec experienced the next greatest decline, dropping 10.1% from April to $760 million.

The largest increase occurred in Ontario, where municipalities issued $1.7 billion in new permits, up $125 million from April.

Among census metropolitan areas, Québec, Toronto and Hamilton recorded the largest gains in May, while declines were strongest in Montréal and Winnipeg.

Residential sector: Fourth straight decline in single-family permits

Spurred by growth in multi-family permits, the value of residential permits issued in May recovered some of the ground lost in April, when the single- and multi-family sectors both experienced declines.

Builders took out $740 million in permits for multi-family housing, up 5.9% from April. This gain was propelled by a 10.7% increase in the value of permits for apartments and a 16.0% boost in permits for row house construction.

The single-family component experienced its fourth straight month of decline. Permits fell 1.3% to $1.6 billion, the lowest level since December 2001.

Nationally, permits to construct 17,262 dwelling units were taken out in May, up 0.3% from April. This gain was entirely the result of a 13.1% increase in apartments to 5,769, while numbers for all other categories of dwellings declined.

On a year-to-date basis, about 87,832 dwelling units have been authorized, down 0.2% from the same period of 2002. A decline of 7.7% in the single component offset a jump of 11.6% in the multi-family component.

Despite favourable mortgage rates and the continuing overall health of the Canadian economy, demand for single-family permits continues to cool from record highs at the start of the year. On a 12-month basis, prices for new housing increased 4.5% nationally, according to the New Housing Price Index, offsetting the impact of mortgage rate reductions as the housing affordability index continues to show that home ownership costs remain low. Given the continued affordability and declining construction intentions of single-family homes, this could signify that much of the pent-up demand for new single-family homes is loosing momentum and that the sector is reaching a new equilibrium.

Among the provinces, British Columbia experienced the biggest increase in the value of permits (+8.7% to $353 million) in May, driven by growth in the row housing and single-house segments. It was followed by Nova Scotia (+54.0% to $69 million), where apartment and single permits fuelled the gains.

The biggest declines occurred in Quebec (-4.1% to $446 million) and Saskatchewan (-34.8% to $31 million), where multi-family permits slumped in both cases.

On a year-to-date basis, about $12.3 billion worth of residential permits were issued in the first five months of 2003, up 2.7% from the same period of 2002. The sector continues to forge some year-to-date records, with all classes of permits except for row housing testing new heights. Builders have taken out $8.8 billion in single-family permits (+0.5%) and $3.5 billion in multi-family permits (+8.6%).

Non-residential sector pulled down by decline in the institutional component

A decline in the institutional component, coupled with a small decrease in the commercial component, more than offset gains in industrial intentions in May.

After doubling in April, institutional intentions fell 21.0% in May to $444 million. Most of the decline came from social service building and hospital projects, while educational projects recorded a substantial increase for a second month in a row. Manitoba recorded the largest decrease after a huge gain in April.

Commercial projects recorded a slight decline of 0.3% to $733 million in May. This was still 8.1% above the average monthly value in 2002. The office building and hotel and restaurant categories showed the most significant losses, while the laboratory and trade and service categories recorded substantial increases. Significant declines in Quebec, Manitoba and Alberta slightly offset increases in Ontario, Prince Edward Island and British Colombia.

Intentions in the industrial component rose 8.4% to $297 million, most of this activity coming from the manufacturing plant category. Ontario recorded the most significant increase after two monthly decreases.

Provincially, Manitoba recorded the largest decrease in the non-residential sector (-73.9% to $46 million) after huge gains in April as a result of two major hospital projects. In contrast, gains in all three components led Ontario to the strongest increase (+21.6% to $677 million)

The non-residential sector continued to level off at a high level of activity. On a year-to-date basis, non-residential building intentions reached $7.4 billion, up 11.8% from the same period of 2002, with increases in all three components.

The year-to-date value for industrial building permits reached $1.5 billion from January to May, up 15.7% from the same period of 2002, followed by the institutional component at $2.2 billion (+12.0%). Construction intentions for commercial projects also contributed to the advance, increasing 10.3% to $3.7 billion.

Among the provinces, Ontario had the largest gain (+11.0% to $3.3 billion) in the wake of strong increases in non-residential permits issued in census metropolitan areas of Oshawa, Hamilton and Toronto. Ontario was followed by Manitoba, Alberta and Quebec. New Brunswick recorded the largest decrease (-30.1 % to $72 million).

Available on CANSIM: tables 026-0001 to 026-0008, 026-0010 and 026-0015.

Definitions, data sources and methods: survey number 2802.

The May 2003 issue of Building permits (64-001-XIE, $14/$145) will be available soon.

The June 2003 building permit estimates will be released August 5.

To order data, contact Vere Clarke (613-951-6556 or 1-800-579-8533; clarver@statcan.gc.ca). For more information, or to enquire about the concepts, methods or data quality of this release, contact Michel Labonté (613-951-9690; labomic@statcan.gc.ca), Investment and Capital Stock Division.