An economist points out that the decline is from a record level
Fiona Anderson
Sun
The value of building permits issued in B.C. fell by 27.4 per cent in January, with drops in almost all construction sectors, according to a report released Monday by Statistics Canada.
Permits for $762 million of activity were issued in the province during January, down from $1.05 billion in December. Residential permits were down 33.1 per cent — from $785.2 million to $525.5 million — while non-residential permits fell 10.7 per cent — from $264.9 million to $236.6 million.
But the decline comes after a record month in B.C.
“So, yes, it’s a decline, but from a record level,” Statistics Canada economist Etienne Saint-Pierre said in an interview.
The only sector to buck the downward trend was single family dwellings, where the value of building permits eked up 0.3 per cent to a new record. But that increase may be due to increased costs of construction and not increased activity, as the actual number of units approved was only 1,355, a number high by historical standards, but not a record, Saint-Pierre said.
“The increase in prices inflates the value of permits, but for sure what is clear is there is a strong demand for single family dwellings in B.C.,” he said.
The strength in demand for single-family dwellings is throughout Western Canada.
“In Western Canada the economy is doing very well, so consumer confidence is good, the mortgage rates are still very advantageous [and] people are moving from the Eastern part of the country to the Western part of the country,” Saint-Pierre said. “So that generates a lot of demand for dwellings.”
The small increase in single family permits was more than offset by a drop of almost 60 per cent in the value of permits for multi-family units.
That doesn’t reflect what’s actually happening in the residential construction industry where more developers are looking to build multi-family units, Peter Simpson, CEO of the Greater Vancouver Home Builders’ Association, said in an interview.
Ninety-four per cent of new detached homes in the Lower Mainland are priced at more than $350,000 because of rising costs, Simpson said.
“So what builders are doing is looking at ways to introduce new housing forms like row housing and high density communities with town houses and condominiums,” Simpson said. “They are trying to make housing more affordable by offering other forms of housing.”
He calls the drop in multi-family permits a “timing issue.”
“There’s lots of new [multi-unit] projects on the way,” he said. “I’m seeing a lot of activity out there.”
In the non-residential sector, industrial buildings, such as warehouses, led the drop, with a 63.5 per cent decline from December. Commercial building permits, including office buildings and hotels, dropped 11.1 per cent while permits for institutional building such as schools were up 30.1 per cent.
The increase in institutional building permits was from a very low level in December, Saint-Pierre said. Also, the non-residential is “very, very volatile”, so it is difficult to draw any conclusion based on one month, he said.
In Vancouver, the total value of building permits dropped 17.3 per cent in January compared to December, from $499 million to $412.6 million. The January figures were still a 14.7 per cent improvement over the $359.9 million worth of permits that were issued in January 2005.
Canada-wide the value of building permits was down 19.3 per cent to $5.1 billion from the record high of $6.3 set in December. Residential permits were down 21.4 per cent, while non-residential permits dropped 13.4 per cent.
© The Vancouver Sun 2006
