November 25, 2009
By the numbers
Building permit value in B.C. drops, but residential strong
British Columbia had the largest decrease in the value of building permits of any province in September. Statistics Canada reported earlier this month that building permit values in B.C. dropped by 27.3 percent in September compared to August.
The decline was a result of decreases in all three components of the non-residential sector, which fell by 68.3 per cent to $179 million.
Construction intentions in the residential sector increased by 39 per cent in September, but this wasn’t enough to offset the decline in the non-residential sector.
“People are starting to recognize that there has never been a better time in B.C. to build,” said Philip Hochstein, president of the Independent Contractors and Businesses Association.
“We are optimistic that investment in construction is beginning to climb. The residential sector is already taking advantage of the competitiveness of the current market. We expect investment in industrial, commercial and institutional buildings will follow soon.”
Hochstein said competition for work has increased during the past year’s slowdown, which means contractors have adjusted their pricing because of improvements in productivity, falling commodity prices and reductions in their own profitability.
”With a decrease in construction costs of more than 20 per cent, construction prices have reached the bottom,” he said.
“The affordability of new construction, combined with all-time low interest rates should spur investment.”
In the Lower Mainland-Southwest region, total building permit values decreased by three per cent in September to $433.3 million.
Residential permits increased 64 per cent and non-residential permits decreased 63 per cent in the same period.
Total building permit values fell slightly in September, but were maintained by an upswing in the residential sector.
“Residential permits in September are at their highest level since January 2009 and will likely continue to climb higher due to positive housing market conditions,” said Keith Sashaw, president of the Vancouver Regional Construction Association.
“The fallback in non-residential permits following August’s surge is a common pattern in this sector.”
Sashaw said institutional-government building remains the main source of strength in the non-residential sector. He said he expects more fiscal stimulus spending to work its way through the system and generate other permit surges.
In Vancouver, total building permit values fell 2.4 per cent in September to $372 million.
In Canada, total building permits increased by 1.6 per cent from August to $5.1 billion, which is the second consecutive monthly increase. The residential sector increased by 9.4 per cent to $3.2 billion and the non-residential sector fell by 9.1 per cent to $1.9 billion.
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