Building permits, February 2022

The total value of building permits rose 21.0% to a record $12.4 billion in February, with British Columbia (+130.2%) leading the way. Construction intentions in the residential sector were up 9.8%, while the non-residential sector jumped 43.2%, driven mainly by large hospital permits in British Columbia and Quebec. On a constant dollar basis (2012=100), the total value of building permits increased 22.1% in February.

Residential sector up in February

Construction intentions in February for the residential sector rose 9.8% to $7.5 billion at the national level, with nine provinces reporting gains. Gains in multi-family permit values in British Columbia (+57.9%) reversed January’s decline and contributed to the 18.5% increase at the national level, along with the gains in seven other provinces. 

The total value of single family home permits rose 1.5% in February. Seven provinces reported increases.

Large hospital permits push non-residential sector to new heights

The total value of non-residential building permits surged 43.2% to $4.9 billion in February, largely reflecting large hospital permits in British Columbia and Quebec worth a combined $1.9 billion.

Construction intentions in the institutional component jumped 216.4% for the month, largely reflecting the $1.5 billion St. Paul’s Hospital project in Vancouver. Additionally, the $439 million permit for the second phase of le nouveau complexe hospitalier du CHU de Québec also contributed notably to this component.

The value of commercial permits gained 5.6% in February at the national level, with six provinces reporting increases. A $112 million Wawanesa Insurance office headquarters project caused the value of commercial permits in Manitoba to jump 337.4%.

The total value of industrial building intentions fell 27.9% mostly due to declines in Quebec (-44.8%) and Ontario (-28.8%).

Source: Statistics Canada

Ontario Raises Foreign-Buyers Tax to 20% Cent for Home Purchases

Ontario is increasing a speculation tax on non-resident homebuyers to 20%. The tax will also be expanded to cover the entire province.

It had previously been set at 15% and only applied in the densely populated Greater Golden Horseshoe region in southern Ontario. The province says the changes will take effect on March 30 and are part of the government’s action plan on housing.

Also, under the new law, a non-resident speculation tax or NRST rebate will no longer be available to international students unless they become permanent residents of Canada within four years after the tax became payable. As well, foreign workers are no longer eligible for the rebate. The province said the changes would help “deter non-resident investors from speculating on Ontario’s housing market.” It also said tax relief would be available for those who were committed to “laying down roots” in the province.

A news release says the province is looking at other possible measures aimed at land speculation issues like construction slowdowns that may be driving up home prices. The Opposition New Democrats and Greens had both called for the tax first introduced in 2017 expand province-wide and increase to 20%.

Source: Globe and Mail
Source: Financial Post

Home-Building Industry Calls for ‘Fundamental Change’ to Solve Housing Crisis as New-Home Benchmark Hits $1.86 Million Record

The price of a newly built house or condo hit a historic high in February, in what the homebuilders’ association says is the latest sign of how a housing supply crisis could ultimately hinder the Toronto region’s competitiveness. The benchmark price of new construction detached, semi-detached or townhouse hit $1.86 million in February, a 35% year-over-year jump. Condo prices also rose 13 per cent annually to a $1.18-million benchmark, according to the Building Industry and Land Development Association (BILD).

“We have too much demand chasing too little supply,” said BILD CEO David Wilkes. “Without a fundamental rebalancing of the market we’ll continue to see upward (price) pressures,” he said.

Wilkes said he is increasingly worried about how the high cost of housing could hit the region’s economic prospects. “What does the future of our region look like where price points are resulting in people moving beyond the GTA or price points affect the ability to attract workers or price points affect the ability of an industry that is so important to our economy to continue working,” he said.

“If there is any more evidence that we need that revolution to fix this by creating more supply, I’m not sure what it is,” he continued. With provincial and municipal elections looming this year, Wilkes says it is time for all parties to tell voters how they plan to solve the crisis. “It is not the time for tinkering. It is a time for fundamental change,” he said.

Wilkes was a member of the Ontario Affordable Housing Task Force that published 55 recommendations in February designed to double the number of homes being built in the province to 1.5 million in 10 years. At the time, Municipal Affairs and Housing Minister Steve Clark said bold action was required to tackle the supply and affordability challenge.

The inventory of single-family homes in the pre-construction, in-construction and newly built stages dropped to an all-time low of 546 units in February, according to the BILD numbers compiled by Altus Group. Although inventory was up to about three months’ supply (the time it would take to sell the current inventory at the current sales rate), with 9,165 new homes available for sale, most of those were new condo projects. BILD says a balanced market would be nine to 12 months of inventory.

The 3,630 sales of new construction homes in February was 17% above the 10-year average. Among those sales were 3,048 condos — a 78% year-over-year increase.

Source: The Star

Canadian Home Buying Frenzy is Showing Signs of Slowing Down

The homebuying frenzy that helped drive house prices to new heights during the pandemic appears to be slowing, according to a new poll from Royal Bank of Canada. Buying intentions have shifted back to levels last seen in January 2020 and 23% of Canadians are planning to buy a house in the next two years, the survey found. That compares to 30% in 2021 and 22% in 2020.

Meanwhile, as restrictions end and people return to the office, the desire for more space — which fuelled an exodus from cities to the suburbs and rural areas — is also waning. Location is now more important than a bigger house for 59% of people. They also want to be closer to the things they want and need: one quarter said they’d prioritize proximity to amenities over a larger place to live. Renters, too, are feeling less rushed into making the leap to homeownership, and 27% said they’re more relaxed about buying now than they were in 2020 and 2021.

That could mean somewhat calmer waters are ahead for the housing market, RBC said. “While there is still a significant amount of activity in the market, our research indicates that the rush of Canadians looking to purchase a home over the last two years has subsided,” Andrea Metrick, senior director, Home Equity Financing, Acquisition and Distribution at RBC, said in a release.

The poll comes amid other signs that Canada’s housing market might finally be cooling off a bit. In mid-March, the Canadian Real Estate Association reported a 24% jump in listings in February from January, and a 4.6% rise in home resales. Both those metrics could indicate a market rebalancing is on the horizon, RBC Economics’ Robert Hogue said in a research note.

“We see the arrival of more sellers on the market as a positive sign. This could mark a turning point toward more balanced demand-supply conditions later this year,” Hogue said. At the same time, interest rates are rising, also expected to help with “cooling the demand side,” Hogue said.

Rate hikes could very well be weighing on potential homebuyers, RBC’s poll suggests. 60% said they are worried about climbing rates in the next year, though 47% think they could handle any increases.

Soaring inflation is also hitting people’s buying intentions. Almost half of potential buyers are fretting about what rising costs mean for a home purchase, and 54% fear it will prevent them from being able to afford the expenses that come with ownership.

Meanwhile, home prices have kept marching higher. The average price of a house rose 29.2% in February from the prior year to $816,720, CREA’s most recent data show. That’s keeping people on the sidelines longer than they had originally planned. RBC’s poll showed 30% of would-be buyers think they’ll have to keep living with their parents for a longer stretch before they can afford to move out into their own house.

But, perhaps expecting high prices are here to stay, Canadians also said they are budgeting and saving more so they can reach their homebuying goals. The average budget for a house purchase has risen more than $50,000 from $453,231 in 2021, to $506,646. And the average amount in savings is up to $196,285 from $177,558 last year.

It’s a sign that Canadians are being more prudent about such an important purchase, RBC said. “Between rising costs and the competitiveness of the market, Canadians may now be taking a step back and setting aside more time to plan and save before making the jump into homeownership,” Metrick said.

Source: Financial Post