Residential construction investment

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Spending on investment in residential construction totalled $21.7 billion in the third quarter, up 7.6% from $20.1 billion invested in the third quarter of 2005. Increases in the three components of residential construction investment (new housing, renovations and acquisition costs) were responsible for this growth.

Since the start of 2006, residential construction investment has reached $59.3 billion, up 8.6% from the total for the first nine months of 2005.

The strength of the economy in Western Canada, the vitality of full-time employment, mortgage rates that remain relatively advantageous, and high international immigration are among the factors driving the demand for housing. Sharp increases in new home prices in several centres also contributed to the increase in spending on residential construction.

Expenditures on new home investment reached $11.2 billion in the third quarter, up 8.4% from the same quarter in 2005. The greatest contribution (in dollars) to this growth came from increased spending for new single family homes (+8.8% to $7.1 billion). The growth in investment in new apartment or condominium construction was also a significant factor (+13.9% to $2.5 billion).

A major contributor to the rise in spending on new housing construction was the rise in the average cost for new housing starts, both for single family homes and for apartments/condominiums. After taking into account the change in prices, investment in new housing fell 1.3% between the third quarter of 2005 and that of 2006.

The renovations component also increased 7.8% to $8.5 billion in the third quarter compared with the same quarter in 2005. Acquisition costs were also up, rising 2.7% to $1.9 billion.

Provincially, Alberta and British Columbia stood out sharply from the other provinces. Compared with the third quarter of 2005, investment in Alberta climbed 27.4% to $3.3 billion. This growth was driven mainly by spending on new single family homes (+37.4%). In British Columbia, the 17.1% increase came from higher spending on new single family homes (+25.2%) and investment in apartments and condominiums (+26.1%).

Note: Residential construction investment is divided into three main components. The first is new housing construction, which includes single dwellings, semi-detached dwellings, row housing and apartments, cottages, mobile homes and additional housing units created from non-residential buildings or other types of residential structures (conversions).

The second component of residential construction investment (renovations) includes alterations and improvements in existing dwellings. The third component is acquisition costs, which refers to the value of services relating to the sale of new dwellings. These costs include sales tax, land development and service charges, as well as record-processing fees for mortgage insurance and the associated premiums.

Because ownership transfer costs are not included in the investment totals presented in this release and in CANSIM table 026-0013, the figures here do not match the figures published in the National economic accounts.

Available on CANSIM: table 380-0010.

Definitions, data sources and methods: survey number 5016.

Available on CANSIM: table 026-0013.

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