The value of building permits fell in November

The value of building permits fell in November but still remained slightly above the $6-billion mark for a seventh consecutive month.

Municipalities issued building permits worth $6.0 billion, down 9.9% from October. Fewer construction intentions for both residential and non-residential buildings contributed to the decline in November.

On a year-to-date basis, the total value of building permits issued by municipalities from January to November hit $68.1 billion, up 12.4% from the total for the first 11 months of 2006. This total was also 2.8% higher than the previous annual record of $66.3 billion set in 2006. The strong results came from gains in both residential and non-residential sectors.

In the non-residential sector, intentions fell 17.5% to $2.2 billion in November. A rise in industrial construction intentions was insufficient to offset strong decreases in the commercial and institutional components.

The residential sector followed suit with a 5.0% decline to $3.9 billion. A slight gain in single housing could not make up for a dive in the multi-family component. Municipalities approved 19,659 new units, down 4.3%.

November's decline in the total value of permits was spread across the country as every province, except for Newfoundland and Labrador and Manitoba, recorded decreases.

Housing sector: Decline in demand for multi-family units

The value of permits for multi-family dwellings fell by 15.2% in November to $1.4 billion, an amount close to the 2007 monthly average. The number of multiple-family units approved decreased 7.9% to 9,914.

Single-family permits increased by 1.8% to $2.5 billion. The number of new single units authorized remained virtually unchanged (-0.2%).

Strength in employment, growth in disposable income, tight apartment vacancy rates in certain centres and attractive financing options continued to affect positively the housing sector.

However, the deterioration of housing affordability due to the growth in prices for new housing and the recent increases in mortgage rates could erode demand.

Provincially, the largest decrease (in dollars) occurred in British Columbia, where the value of housing permits fell 28.5% to $611 million. The drop originated from a 49.7% decrease in the value of multi-family permits.

Quebec followed with a drop of 8.8% to $735 million, as a result of decreases in both the single and multi-family components.

In contrast, Alberta experienced the largest gain among the province with an increase of 13.3% in residential intentions. This gain originated from both single and multi-family housing.

For the first 11 months of 2007, the value of housing permits totalled $41.5 billion, up 10.5% from the same period in 2006. The gain was fuelled by growth in both the single-family (+8.6%) and multi-family components (+14.2%).

Non-residential sector: Construction intentions at their lowest level in seven months

The value of non-residential permits plunged in November to its lowest level since April. This drop came after the value of non-residential permits surged 19.8% in October, thanks to large commercial projects in Calgary.

Commercial intentions tumbled 32.5% to $1.1 billion in November, the lowest level since February. The drop was largely fuelled by a decline in permits for office buildings and by smaller decreases in retail trade buildings and warehouses.

Following a 30.6% gain in October, the value of institutional permits decreased 14.1% to $581 million. The decline was spread across various types of institutional buildings (schools, nursing homes, administrative buildings, churches).

In contrast, the industrial component climbed 47.9% in November as the value totalled $495 million, halting three consecutive monthly declines. Construction projects for manufacturing buildings fuelled the increase in November.

Following peaks in May and June, the value of non-residential permits has been on a downward trend because of lower levels in commercial permits. In contrast, the value of industrial and institutional permits has been on an upward trend over recent months.

Provincially, the largest decline in non-residential construction intentions (in dollars) occurred in Alberta (-36.7% to $480 million), after an exceptional month in October, as important gains in institutional and industrial permits were offset by the drop in the commercial component. Ontario followed with a sizeable 16.1% decline.

In November, gains in the non-residential sector were recorded only in Newfoundland and Labrador, Saskatchewan, British Columbia and Northwest Territories.

For the January-to-November period, the total value of non-residential permits reached $26.6 billion, up 15.5% from the same period in 2006. The total has already surpassed the annual record of $25.2 billion reached in 2006.

The three non-residential components posted marked gains in their cumulative numbers. The value of commercial permits increased 19.2% to $15.6 billion; the gain was largely fuelled by the strong demand for new office space. The value of institutional permits gained 7.0% to $6.3 billion, thanks to projects for hospitals and nursing homes. Industrial permits increased 16.0% to $4.7 billion due mostly to projects for plants.

Among the provinces, Ontario (+26.1%) showed the largest cumulative increase in non-residential construction, followed by Alberta (+19.7%) and Quebec (+15.3%). The levels in Ontario and Alberta already surpassed their annual records reached respectively in 2005 and 2006.

Low office vacancy rates in major centres, the increasing demand for health and nursing facilities and the vigorous retail and wholesale sectors contributed to generate an increase in non-residential construction projects.

Metropolitan areas: Boom in construction intentions for Toronto

On a year-to-date basis, 22 out of the 34 census metropolitan areas showed gains. The largest by far (in dollars) occurred in Toronto, where $12.0 billion worth of construction projects have been approved since the beginning of 2007, nearly $2.0 billion more than the value from January to November in 2006. Construction projects for office buildings and new single-family dwellings were the largest contributors to the strong showing.

Calgary, Montréal, Edmonton and Québec distantly followed, each of them showing gains in both the residential and non-residential sectors. In contrast, Windsor, Barrie and Oshawa posted the largest retreats.

Available on CANSIM: tables 026-0001 to 026-0008, 026-0010 and 026-0015.

Definitions, data sources and methods: survey number 2802.

The November 2007 issue of Building Permits (64-001-XWE, free) will be available soon.

The December 2007 building permit estimate will be released on February 6.

To order data, contact Jasmine Gaudreault (              613-951-6321       ; toll-free               1-800-579-8533       ; bdp_information@statcan.ca). For more information, or to enquire about the concepts, methods or data quality of this release, contact Nicole Charron (              613-951-0087       ), Investment and Capital Stock Division.