October 15, 2008

National building permit values continued their tumble in August 2008

RICHARD GILBERT

staff writer

Building permit values in Canada declined sharply in August, with the most significant drops in Alberta and Ontario.

Statistics Canada reported that the value of building permits dropped by 13.5 per cent nationally, lead by decreases in seven provinces. The most significant decline was in Ontario (-11.5 per cent to $2.1 billion) and Alberta (-19.1 per cent to $916 million). The drops were in multi-family dwellings and non-residential building.

In B.C., construction intentions experienced a more moderate decline falling by 6.9 per cent to $828 million.

In the Lower Mainland-Southwest region, permit values dropped by four per cent to $524 million.

The head of the Vancouver Regional Construction Association (VRCA) isn’t concerned about the drop.

“These declines are reasonable under the circumstances, as consumers and investors wait out the current financial turmoil before deciding what to do,” said Keith Sashaw, VRCA president.

“We expect to see continued declines over the next few months given the volatility in the financial markets. However, the underlying fundamentals of the regional construction industry continue to be positive.”

Sashaw said that VRCA members remain cautiously optimistic because the Major Projects Inventory and employment data are still strong.

“The focus of many of our members is beginning to shift toward infrastructure projects such as roads, bridges and power projects,” he said.

According to Statistics Canada, the national decline was caused by a fall in both the residential and non-residential sectors.

Nationally, the value of building permits fell to $5.6 billion in August from about $ 6.5 billion in July.

On a year-to-date basis, permits were down 0.7 per cent from the same period last year.

The residential sector was down.

“This decline was mainly due to a 17.5 per cent drop in multi-family dwellings, coupled with a 3.8 per cent in single family dwellings. In August, the value in the non-residential sector fell 19.3 per cent to $2.2 billion as a result of declines in all three components (industrial, commercial, institutional),” said the report.

A decline in educational buildings permits in Ontario was a driving force behind the falling statistics, while construction intentions for commercial buildings declined for the third straight month.

Three-quarters of the decrease originated in Alberta, where the fall was principally a result of lower intentions for office buildings.

Industrial permits continued its volatile pattern, decreasing 16.6 per cent to $414 million, after a 24.8 per cent increase in July.

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