Perpetual Construction Near Front
and Bathurst by Simon Carr
It is not surprising that our biggest city has the most amount of construction going on. In April, though, the volume of applications declined particularly in Ontario. Nonetheless, our builders never sleep, and investment into properties is ongoing. Let’s look at some of the statistics on building permits issued by the local authorities. Why? Because the volume of building permits is the most reliable early indicator of future construction in an area.
Getting over the hurdle
Solid After the Dip
The good news is that the crisis is over — not that Toronto or Canada were hit by the credit crunch terribly in the first place. As we all know, the Canadian subprime market has never been very large. On the other hand, parts of the development investments are sourced from abroad, so 2008 saw a major decrease of building permit applications.
Since 2009, however, the volume of applications has caught up with its pre-crisis levels and has held at a relatively solid level. Builders across Canada apply for building permits of about $5.8 billion a month on average, which equals about $168 per month per citizen. This is a very optimistic situation compared to the US, where the 2010 value adds up to about $27.3 per month per citizen. Granted that there are different rules for building permit applications in the US (and thus these two figures are not directly comparable), this is still a significant difference in Canada’s favour.
Ontario Stumbling in April
The most recent statistics for April reveal that most provinces and territories have lost some momentum, Ontario being the most pronounced among them. Whereas non-residential construction has slumped in most areas compared to March 2011, growth in residential construction has compensated for some of this slump everywhere except Ontario and Quebec.
Non-residential Developments
The non-residential sector decline was caused by the preceding hike in construction intentions of educational institutions and medical facilities in Ontario and Alberta. This was coupled with Ontario’s decline in the planned construction of hotels, warehouses, and retail stores.
The opposite trend was present in the category of industrial building permits backed by construction intentions for primary sector buildings (raw materials collection and transformation) and utilities.
Residential Developments
Despite the fact that seven provinces recorded increases in residential building permits, Ontario and Quebec “singlehandedly” swayed the statistics to a 12.6% overall decrease compared to March.
In Ontario, this relative drop followed a significant hike in March and has not dragged the total under the February results. There seems to have been lower construction intentions for multi-family dwellings and institutional buildings. This was the case in Montreal as well.
Despite these immediate month-to-month variations in building permits, Toronto remains the city with the fastest pace of new construction and is by some Metrics the freshest city in the country.
Are you planning to buy a newly built property anytime soon? Let me know in the comments, please!
See here for the raw statistics on monthly building permit developments and an annual permit volume comparison from Statistics Canada.
