Permit approvals dropped in February, but backlog not affected much
Derrick Penner
Sun
A February plunge in building-permit approvals does nothing to ease the “constant, unrelenting pressure” on B.C.’s construction sector, one industry official said.
B.C. municipalities reported approving $833.5 million in new construction in February, Statistics Canada reported Wednesday, a 22.4-per-cent drop from January.
However, January’s permits, which hit just over $1 billion, puts the pace of construction in B.C. 31 per cent ahead of the booming pace for the first two months of 2006.
“I can’t tell you what happened in February,” Manley McLachlan, president of the B.C. Construction Association, said in an interview. But he expects the overall trend to reflect increasing levels of construction, particularly in the non-residential sector.
“We’re going to see [volatile swings] more as building owners and developers look at what projects are underway, and when do we undertake these projects in order to make sure they’re not jamming up the system.”
Timing the start of projects will become critical, McLachlan added, so as not to over-tax B.C.’s already stretched construction workforce.
The February dip hit most centres in B.C. Vancouver saw $428.4 million in permits issued, a 34-per-cent decline from January. Victoria’s drop from the previous month was almost 45 per cent to $66.8 million.
Abbotsford saw the biggest month-to-month decline, 41 per cent to $28.8 million.
Those results fit in with the national experience reported by Statistics Canada, which reported that municipalities issued $4.9 billion in building permits, a 22.4-per-cent drop from January with the decline touching almost all provinces and in both residential and non-residential construction.
Some of the decline may be attributable to weather, with the country sliding into a February deep freeze.
Douglas Porter, an economist with BMO Capital Markets, said the underlying conditions for construction are stronger than the 22.4-per-cent February drop in permits suggests, but “the hefty retreat does support the view that housing activity will moderate in the year ahead.”
Statistics Canada noted the number of housing unit permits issued has been edging down since last summer, following almost uninterrupted growth since the beginning of 2005.
However, while Helmut Pastrick, chief economist for Credit Union Central B.C. does expect B.C. to post fewer housing starts in 2007, he is also forecasting that any drop in residential construction will be more than offset by a rise in non-residential building.
“Ignoring the month-to-month volatility, the trend is pointing nicely upwards,” Pastrick said.
And after taking construction inflation into account, he added that “real, non-residential investment is on an upswing [that] I expect to increase this year and very likely next.”
Pastrick added that a slowing in construction in the rest of Canada might drag on B.C., but for the most part, his forecast for higher levels of building here “reflects the stronger domestic economy, and my expectation is we will see more of that going forward.”
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BUILDING BOUNCE
B.C. saw a January high for building-permit approvals followed by a February low, with forecasters anticipating more of the former than the latter through the rest of the year.
Feb. 2007* Jan. & Feb. 2007**
B.C. $833 million -22.4% $1.9 billion +31.0%
Vancouver $428 million -34.4% $1.1 billion +40.7%
Abbotsford $28.8 million -41.1% $77.7 million +82.7%
Victoria $66.8 million -19.3% $149.6 million +44.9%
Kelowna $46.4 million +35.5% $80.6 million +26.3%
* percentage compared to January 2007 ** percentage compared to Jan-Feb 2006
Source: Statistics Canada
