Total value of permits remains very high

Construction intentions maintained their sizzling pace this spring, as the value of building permits issued followed a record-breaking month in May with another strong showing in June. The back-to-back performances point to very busy construction sites in the coming months.

In total, municipalities issued $6.9 billion worth of building permits in June, down only 0.4% from May. The figure for June was the second-highest on record, surpassed only by the peak in May.

Gains in the residential sector were offset by declines in non-residential construction intentions. Non-residential permits declined 10.0% to $2.8 billion as all three components (industrial, commercial and institutional) of this sector fell. Again, this level was second only to the record-high performance in May.

In the residential sector, intentions climbed 7.4% to more than $4.1 billion. This is only the second time residential permits have surpassed the $4-billion mark, the first time having occurred in December 2005.

The demand for new dwellings remained notably strong as a total of 21,515 new dwelling units were approved in June, a number surpassed only twice since 1990.

The second quarter of 2007 was the highest on record for the total value of building permits, with construction intentions reaching $19.5 billion, up 13.6% from the first quarter of 2007. Strong quarterly growth was recorded in both the residential (+12.9%) and non-residential (+14.5%) sectors.

Housing sector: Multi-family permits provide boost

Municipalities approved multi-family permits valued at $1.6 billion, a 14.2% increase from May and the second-highest level on record. The number of multi-family units approved rose 18.3% to 11,726, continuing the upward trend that started in January.

Single-family permits increased 3.3% to $2.5 billion, the highest level on record. The number of single-family units authorized crept up 0.5% to 9,789. Single-family units approved have been trending upward since May following a decline that started in September 2006.

Strength in employment, growth in disposable income, tight apartment vacancy rates in several centres and attractive financing options continued to stimulate the demand for housing.

Residential permit values increased in only three provinces. The large gains in Alberta and Ontario were sufficient to set the stage for an overall increase in residential permit values despite declines in seven provinces.

Residential permits rose 46.4% in Alberta to a record $983 million, propelled by a 166.3% increase in the value of multi-family permits. Several large projects for apartments/condominiums were behind this strong gain. Single-family permits also increased significantly.

In Ontario, residential permits were up 9.2% to $1.3 billion, buoyed by a 25.0% jump in the value of multi-family permits.

Significant ground was ceded in British Columbia, where permit values dropped 12.6% to $808 million, owing to a large drop in the value of multi-family permits. The decline in this component was due largely to a decrease in the average value of multi-family units approved.

On a quarterly basis, residential permit values increased in seven provinces in the second quarter. Nationally, permit values for both single-family (+3.8% to $7.1 billion) and multi-family (+31.4% to $4.5 billion) units posted new record quarterly values, boosting the total value of residential permits 12.9% over the first quarter to $11.6 billion.

Non-residential construction intentions remain very high

The value of non-residential permits declined in June from an exceptionally high level, as demand for office space in Calgary had inflated the results in May. Despite a 10.0% decline, the $2.8 billion worth of non-residential permits issued in June was the second-highest level on record.

When Alberta is excluded from the national figures, the value of non-residential permits increased 13.4% in June.

Significant gains were recorded in five provinces. Ontario recorded the most significant increase (in dollars) among the provinces, as a jump in commercial permits more than offset decreases in the industrial and institutional components.

For both British Columbia and Nova Scotia, the level in June was the second-highest on record, thanks to advances in all three non-residential components. In Quebec, the large increase in institutional permits led the value of non-residential permits to its highest level since March 1998.

In Saskatchewan, the level reached in June was the highest in nearly 18 years, thanks to commercial permits.

Construction intentions in the commercial component reached $1.8 billion in June, the second-highest level on record, after peaking at $2.1 billion in May. Several large projects spread across a wide variety of buildings, such as recreation buildings, office buildings, hotels, retail and warehouse buildings, contributed to the strong showing.

The value of commercial permits has been on an upward trend since the end of 2005, and the recent strength in the results is largely consistent with the very dynamic retail sector, the declining vacancy rates for offices as well as the strong corporate profits.

Following a 78.6% jump in May, the value of institutional permits decreased 4.8% in June to $592 million. Despite the decline, this level remained 11.4% higher than the average monthly level observed since the beginning of 2007. A gain in the value of permits for schools failed to offset the declines in projects for medical buildings and nursing homes.

In the industrial component, the value of permits declined 7.4% to $403 million, after a 26.1% gain in May. The decline came from fewer investment projects for manufacturing buildings. The value of industrial permits has been on a declining trend since the end of 2006. This result is consistent with the challenge that manufacturers face with the appreciation of the Canadian dollar.

On a quarterly basis, the value of commercial permits jumped to its highest quarterly level on record ($5.2 billion) in the second quarter, increasing 32.9% from the first quarter. The quarterly values of industrial (-15.2% to $1.2 billion) and institutional (-4.0% to $1.6 billion) permits declined over the same period.

Metropolitan areas: Value of permits in Calgary remains high

Among the 34 metropolitan areas, 19 recorded declines in their total value of building permits. The largest declines occurred in Calgary, after the value of permits in this area had surpassed the $1-billion mark in May. With a total of $697 million in permits issued, June's level was the second-highest on record.

The ground lost in Calgary was compensated for by rises in Toronto and Edmonton, thanks to gains in both the residential and non-residential components for each area. Significant increases also occurred in Montreal and Regina.

The values of permits in Edmonton and Regina both reached new record highs in June.

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

Definitions, data sources and methods: survey number 2802.

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

The July building permit estimates will be released on September 6.

To order data, contact Jasmine Gaudreault (toll-free               1-800-579-8533       ;               613-951-6321       ; bdp_information@statcan.ca). For more information, or to enquire about the concepts, methods or data quality of this release, contact Haaris Jafri (              613-951-0040       ), Investment and Capital Stock Division.