Building permits

The value of building permits issued in July fell 11.4% to $4.8 billion from the record $5.4 billion set in June, as both the residential and non-residential sectors declined. However, July was still the second highest month on record.

A drop of nearly one-third in the value of multi-family permits issued compared with the previous month drove the residential sector down 10.3% to $3.1 billion. Despite the decline, it was still the third best month on record.

The growth in the institutional sector in July was more than offset by flagging demand for commercial permits, which led to a drop in non-residential projects (-13.3% to $1.7 billion). This was the second highest level for non-residential permits over the last 12 months.

On a year-to-date basis, the residential sector's strength drove the overall value of building permits for the first seven months of 2004 up 8.6% to $31.9 billion. Builders took out $21.2 billion worth of residential permits between January and July, up 18.3% from the same period in 2003. Non-residential permits fell 6.7% to $10.7 billion.

Regionally, the census metropolitan areas of Vancouver and Montreal posted the largest gains in 2004, thanks to the demand for new dwellings in both areas. A drop in industrial and institutional building permits led to Toronto posting the largest year-to-date decline compared with 2003.

Single-family dwellings post new high while the multi-family component retreats

Despite the 10.3% decline in June, the housing market remained exceptionally strong, staying above the three billion dollar mark in July—the third highest monthly value on record.

The steady upward march in the value of permits for single-family dwellings continued in July. The value of homes approved edged up 2.0% from the previous month to top $2.1 billion—a new monthly record. Nearly 11,250 new single family units were approved in July alone.

After a remarkable record showing in June, multi-family permits fell 29.0% to a still robust $975 million dollars. Municipalities approved 9,200 multi-family units during the month.

Very advantageous mortgage rates, the positive employment situation and an increase in disposable income helped fuel the feverish demand for new dwellings.

Alberta posted the largest monthly gain in dollars (+11.2% to $408 million) on the strength of both single- and multi-family permit issues. The largest decline was in British Columbia, down 41.5% to a still healthy $474 million. This followed a record high in the residential sector in June, which was spurred by permits for multi-family dwellings.

On a year-to-date basis, the value of single-family permits stands at $14.1 billion dollars, up 13.1% over the same period last year. The multi-family segment has staged even more robust growth, gaining 30.3% to $7.1 billion.

Overall, municipalities have authorized 141,628 single- and multi-family units over the first seven months of 2004, up 11.6% compared with the same period in 2003.

In every province and territory, the cumulative value of housing permits issued so far in 2004 have surpassed last year. British Columbia and Quebec have posted the most striking growth in value with both jurisdictions adding over a billion dollars to last year's cumulative total for the period.

Large decline in the commercial construction intention pulled down non-residential sector

Builders took out fewer commercial and industrial permits in July, while the value of institutional permits climbed.

Following June's tremendous increase, commercial permits fell 29.0% to $764 million. This was largely the result of lower demand for recreational projects and trade and services buildings. Commercial permits in Ontario plunged 26.6% to $329 million—the largest drop among the provinces.

After two monthly gains, the industrial component fell 1.6% to $301 million but remained higher than the monthly average this year. Lower demand in the mining and agricultural building category in British Colombia was responsible for this slide.

Permits for the institutional sector advanced 11.6% to $592 million—the highest level since July 2003. Demand for institutional permits in Ontario was particularly strong (+21.1% to $307 million), as construction intentions for educational buildings in the Toronto region increased.

Despite the decline in the value of non-residential permits, good news has recently emerged for the non-residential sector. Retailers have enjoyed five monthly sales gains since the beginning of 2004. Cumulative sales in the first six months of the year were 4.0% higher compared with the same period of 2003. Canadian corporations earned record high profits of $50.7 billion in the second quarter of 2004, up 4.1% from the first quarter. Operating profits have now risen for four consecutive quarters. In addition, manufacturers posted record-high shipments in June.

On a provincial basis, the largest decrease (in dollars) was in Quebec (-27.9% to $303 million), where a gain in the institutional component was more than offset by declines in the industrial and commercial sectors. The largest increase was in Alberta, led by gains in all three components.

Approximately $10.7 billion worth of non-residential permits were issued in the first seven months of 2004, down 6.7% from the same period of 2003. This drop was related to decreases in the institutional (-15.5%) and industrial (-19.1%) components. The commercial component advanced 4.7%.

Among the provinces, the largest decline in the non-residential sector was in Ontario (-11.2% to $4.8 billion), mainly the result of decreases in the institutional and industrial components in Toronto and the institutional component in Hamilton. The strongest gain occurred in British Columbia (+10.0% to $1.2 billion).

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

Definitions, data sources and methods: survey number 2802.

The July 2004 issue of Building Permits, Vol. 48, no. 7 (64-001-XIE, $15/$156) will soon be available.

The August 2004 building permit estimate will be released on October 6.

To order data, contact Brad Sernoskie (613-951-4646 or 1-800-579-8533; bdp_information@statcan.gc.ca). For more information, or to enquire about the concepts, methods or data quality of this release, contact Étienne Saint-Pierre (613-951-2025), Investment and Capital Stock Division.