Canada Building Permits Fell 3.9% in July

Canadian building permits fell in July because of lower construction intentions in the single-family home category and for institutional, and commercial buildings.

The total value of building permits in July declined 3.9% on a month-over-month basis to a seasonally adjusted 9.90 billion Canadian dollars, or the equivalent of $7.84 billion, Statistics Canada said. Market expectations were for a 2% increase, according to economists at TD Securities.

In the previous month, permits issued rose by a revised 7.2%, up from an earlier estimate of a 6.9% advance. On a year-over-year basis, the overall value of permits issued in July advanced by 21.8%.

Seven provinces reported declines in the residential sector, led by a 10.5% decrease in Ontario. Single-family permits fell 9.6% in July, with two provinces showing growth. 

Construction intentions for multi-family units rose 2.7% in July. British Columbia posted an increase of 55.1%, which was driven by high-valued condo projects in the city of Surrey. In contrast, Ontario reversed strong growth in June and fell 11.7% in July due to fewer high-valued condo permits reported for the census metropolitan areas of Hamilton and Guelph.

Non-residential permit values declined 5.6% to $2.9 billion in July, despite Ontario’s strong growth of 17.3%. Seven provinces were down, with Alberta reporting the largest decrease of 46.9%.

Institutional permits decreased for a third consecutive month to $718 million, with eight provinces reporting lower values. The majority of the decline stemmed from the 36.8% decline in Quebec, following a strong June when multiple high-valued permits were issued for alternative care and senior homes. Conversely, Ontario saw a 60.0% increase, with projects such as the Linhaven nursing home and a new secondary school both in the CMA of St. Catharines–Niagara.

The value of industrial permits was up 17.6% to $612 million, with half the provinces reporting growth. Quebec led the increase, with a $30 million warehouse permit, and was followed by Nova Scotia, where a $40 million composting facility permit was issued.

Building permits provide an early indication of construction activity in Canada and are based on a survey of 2,400 municipalities, representing 95% of the country’s population. The issuance of a permit doesn’t guarantee that construction is imminent.

Source: Market Watch
Source: Statistics Canada

New Homes Set Record in July With Prices for Single Family Homes Up Almost 30%

As the pandemic goes on, the price of new construction homes continued to hit records in July with single-family homes leading the way. The benchmark price in that category, including detached, semi-detached and townhomes, soared 28.4% year-over-year in July to an average of $1.52 million. The condo benchmark also climbed 10% to $1.1 million on average, according to the Building Industry and Land Development Association (BILD) that represents homebuilders.

Sales of newly built and pre-construction homes slumped, however. The 662 single-family homes that sold in July marked a 61% decline compared with last year’s extraordinary pandemic July period, putting them 21% below the 10-year average.

July’s 1,478 condo sales were down 26% year-over-year and 11% lower than the decade average, according to the figures compiled for BILD by Altus Group. It found that condo prices averaged a record $1,141 per sq. ft. in July in the Toronto area.

This year to date, however, sales of single-family homes and condos remain above the 10-year average.

“The pent-up demand and the race for space that we had experienced during the initial part of the pandemic, all of that demand has passed through the market. We didn’t see the same level of sales we saw last year,” said BILD CEO David Wilkes. “It was not only the typical slowing in July but as a result of the record-setting activity in the previous months there’s been a bit of a pause in the market,” he said.

The remainder of the year will likely reflect a more traditional level of sales rather than the higher activity seen through the first part of the pandemic, said Wilkes.

The problems in the housing market that existed prior to the pandemic and that were accelerated during COVID haven’t gone away, he said. Inventory levels of new construction and pre-construction homes for sale are approaching a “crisis point.”

There is only about one month of inventory in single-family homes compared to a 10-year average of five to eight months’ inventory. In condos there is an inventory of about 4.1 months compared to a 10-year average of 8.7 months, said Wilkes.

“We continue to just not have enough inventory and new builds coming on to facilitate the demand this region is seeing in new homes sales and that is a problem that was with us before the pandemic, through the pandemic, and has not gone away,” he said.

Wilkes would not comment on federal party housing platforms but said he is pleased to see a consensus that we need to be building more housing. There needs to a collaborative effort among all levels of government to address the supply side of the housing affordability problem, said Wilkes. Designating land for growth, ensuring it is zoned appropriately, and removing red tape around housing approvals are ways of doing that. He also urged governments to guard against overtaxing new development, “which is already 25% of the cost” of housing.

Source: The Star