Value of permits falls, housing starts hold firm
Canadian municipalities issued $7.8 billion worth of building permits in February, down 5.7 per cent from the previous month and 6.8 per cent lower than in February 2018. The decline was largely due to lower construction intentions for multi-family dwellings.
The value of permits for residential buildings declined 8.5 per cent in February to $4.9 billion, the lowest level since April 2017. The value of non-residential permits also fell, albeit by 0.5 per cent to $2.9 billion – $104.8 million lower than in February 2018.
The value of institutional permits rose 11.6 per cent, the first increase in five months, although the figure was still 11.6 per cent lower than a year earlier. A high-value permit issued for the Qikiqtani Correctional Healing Centre in Nunavut contributed to the gain.
Meanwhile, the trend in housing starts was 202,279 units in March 2019, compared to 202,039 units in February, according to Canada Mortgage and Housing Corporation (CMHC). This trend measure is a six-month moving average of the monthly seasonally adjusted annual rates (SAAR) of housing starts.
In the Vancouver CMA, housing starts trended higher in March, with multi-family projects getting underway in the City of Vancouver accounting for approximately half of the total for the month. Housing starts recorded in the first quarter were 16% below the total for the same three months of 2018.
A rise in apartment starts in the Toronto CMA offset the decline in low-rise starts. Rising homeownership costs dampened pre-construction sales for low-rise homes in 2018 and is a driver behind condominium apartment starts continuing to dominate the area’s new housing construction in 2019.
In Calgary, a combination of soft demand and elevated inventory has prompted builders to continue slowing down production. The exception is row starts, which have increased year-over-year by 48% in the first quarter.
Just over 5,000 starts were recorded in Montréal CMA during the first quarter of 2019 – a 10-year high. This brisk pace of activity was attributable to significant apartment construction, particularly in the rental housing segment.