Canada is planning a lot of new construction activity, but it’s not housing they’re looking to build. Statistics Canada (Stat Can) data shows the building permit values soared in October. The increase in permits, a leading indicator of future building activity, was due to non-residential building. Residential building actually weighed down the aggregate, falling further into its correction. A drop in permits for new homes in BC and Ontario is entirely behind the decline.
Canadian Building Permits Surged Higher To $10 Billion
Canadian building permits showed a sharp increase and generally remain elevated. The seasonally adjusted value of permits reached $10.3 billion in October, up 1.3% from the previous month. When adjusted for inflation, growth falls to 0.7% over the same period. A lot of inflation means a lot less growth, in case that wasn’t already clear.
Canadian Building Permit Value
The seasonally adjusted value of Canadian building permits.
Residential Permits Made A Small Drop, Still In A Correction
Building permits have two major components — residential and non-residential. The seasonally adjusted value fell to $6.9 billion, down 0.1% from the month before. New home permit values have dropped 16.5% since hitting a peak in March. This puts it firmly in correction territory, driven by a slowdown in major markets.
The decline in new residential permits is due to a pullback in the big two real estate markets — BC and Ontario. BC saw values drop 4.9% in October and Ontario saw a drop of 2.2%. The provinces combined make up more than half of all residential real estate value in Canada. Predictably, the decline they made was enough to weigh down the whole national sector.
Canadian Residential And Non-Residential Building Permit
The seasonally adjusted monthly value of Canadian building permits by residential and non-residential use.
Non-Residential Permits Are Surging Higher
It wasn’t all bad news though, remember how we said new building permit values made a sharp increase? This is due to a rise in non-residential permits, such as commercial buildings.
The seasonally adjusted value reached $3.4 billion in October, up 4.2% from the previous month. Stat Can emphasized the fact this number is now 16.7% higher than it was in February 2020. When looking at the chart above, we can see this segment is trending towards the higher-end of normal.
Canadian building permit activity increased sharply, but it’s concentrated in non-residential activity. This isn’t as bad as it sounds, considering what the segment actually is. Non-residential building includes commercial and institutional buildings, as well as infrastructure. These are investments used to increase the country’s commercial capacity, which is generally a good thing.
As for new permits for residential activity, it might be in a correction, but it isn’t all that bad. There’s a near-record amount of construction, and it’s much higher than it was pre-2020. Though a multi-billion dollar drop is sure to leave an impact felt by someone in the market.
Source: betterdwelling.comPosted by Teri-Lynn Jones on