The value of Greater Vancouver residential building permits fell for the second straight month in August, but the housing bubble hasn’t burst, industry observers said Wednesday.

Statistics Canada said there were $236.4 million worth of residential building permits issued in Greater Vancouver in August, nearly 21 per cent below the July total, which was about 50 per cent lower than June activity.

But the value of non-residential building permits throughout the region rose by more than 16 per cent in August to $98.1 million. Increases in retail construction intentions accounted for much of the gain.

Greater Vancouver Home Builders’ Association chief executive Peter Simpson said the home construction market remains strong, despite the two-month decline in building permit values.

“A trend gets established over a number of months so two months is no trend at all,” he said. “There are some big projects coming up from major developers, so I think it’s just a timing thing. There are always going to be times of the year when it’s a little slower.”

StatsCan said the value of residential building permits issued throughout B.C. fell by 14 per cent in August to $402.9 million, while the value of non-residential permits increased by 19 per cent to $197 million.

The value of permits issued in the trade and services category in B.C. — mainly for retail construction — rose from $17.9 million in July to $43.8 million in August. (StatsCan officials note the category is extremely volatile, rising from $11.5 million in May to $74.8 million in June.)

Building permit values for the first eight months of this year have risen by more than 33 per cent in B.C. to $5.4 billion, with a 43-per-cent increase in residential permits to $4.04 billion and a 12-per-cent increase in non-residential permits to $1.37 billion.

Simpson said buyer interest in new homes remains strong, despite recent mortgage-rate increases.

“We don’t see interest rates going up enough to cause us any worries right now,” he said. “The affordability threshold is still fairly low, which means more people can qualify for mortgages.”

Simpson said the market remains strong at all price levels, low end and high end, and he knows of one Whistler builder who has built three multi-million-dollar homes on speculation — without buyers committed to the properties.

“The bubble hasn’t burst,” he said. “There was never really a bubble in the first place because it has been a steadily increasing market. It hasn’t gone up like a rocket or down like a rocket.”

Credit Union Central of B.C. economist Dave Hobden said the two-month downturn in B.C. residential building permits is a “blip” caused by developers who fast-tracked their permit applications to beat a July 1 deadline to avoid higher development cost charges.

He said his department is sticking with its forecast that calls for B.C. housing starts to rise from 26,200 last year to 32,400 this year and to 35,200 in 2005.

“There has been a slight drift upwards in mortgage rates, but not enough to really dampen the market,” Hobden said. “Pent-up demand is still very strong, although there may be a slowing in the growth rate of the market.”

StatsCan said the total value of building permits issued across Canada fell by 4.6 per cent in August to $4.5 billion, but the total is still 7.4-per-cent higher than the average monthly level in 2003, which was considered an exceptional year.

BUILDING PERMITS DECLINE:

20.7%

decline in residential permits, for a total of $236 million

16.2%

increase in non-residential projects, for a total of $98 million

Source: Statistics Canada

© The Vancouver Sun 2004