High June figures helped set up the plunge, industry spokesman says
Fiona Anderson
Sun
The value of building permits issued in Vancouver plunged 31.5 per cent in July, with the non-residential sector suffering a staggering 48.5-per-cent decline, a Statistics Canada report said Wednesday.
All three components of the non-residential market decreased substantially, with the institutional sector down 59.3 per cent while commercial permits dropped 42.7 per cent and industrial building permits fell a relatively mild 15.2 per cent.
Keith Sashaw, president of the Vancouver Regional Construction Association cautioned against putting too much weight on the numbers.
“There is a great deal of volatility in the numbers as they go up and down because if you’ve got a major project coming on it can skew the numbers,” Sashaw said in an interview.
But the Construction Association is not surprised by the significant downturn.
“That’s primarily because the June figures were extraordinarily high. They were the highest non-residential construction starts on record,” Sashaw said.
He suggests looking at the year-to-date figures to get a better picture of the industry.
“We are still seeing the construction industry as very healthy, very active and growing,” he said.
Since January, $1.1 billion worth of non-residential building permits have been issued in the Vancouver area, an increase of 66.6 per cent from the previous year, Statistics Canada analyst Etienne Saint-Pierre said in an interview.
The trend may have flattened a bit, Saint-Pierre said, but it remains high.
“Retail sales are very strong, the office vacancy rates are declining [and] corporate profits are very high so there are a lot of factors that point to a healthy non-residential sector,” Saint-Pierre said.
In British Columbia, the value of permits issued for single-family homes reached an all-time record of $294.3 million in July, an increase of 7.2 per cent from June. At the same time, the value of multi-family permits dropped to its lowest level since December 2004, falling 29.1 per cent to $187.3 million. The combined effect was the largest decline in the country for residential permits, a drop of 10.6 per cent.
The shift away from multi-family permits was unexpected.
“At the national level there is a shift toward multi-family dwellings as the price tag associated with single-family dwellings is now quite substantial,” Saint-Pierre said. “So more and more people will go with multi-family dwellings as it is more affordable.”
Year-to-date figures reflect this move toward more affordable housing as single family permits were up 1.3 per cent while multi-family permits increased 8.9 per cent.
Canada Mortgage and Housing Corp. tracks the number of building starts which should mirror the value of building permits, said Peter Simpson, CEO of Greater Vancouver Home Builders’ Association. According to the CMHC numbers, the construction of single-family dwellings was down 13.2 per cent and multi-family units were up 6.7 per cent in B.C. since December 2004, compared to the same period a year earlier.
Those numbers are not surprising given the costs of single-family homes, Simpson said.
“Affordability is a big issue here. I think you are going to see the multiple sector continue to grow,” he said.
Multi-family homes comprise more than 75 per cent of the market. Twenty years ago, they were only 45 per cent of the market, Simpson said.
The total value of all permits issued in B.C. in July dropped 11.8 per cent from June, with a 13.8 per cent decline in the non-residential sector.
However, year-to-date, B.C. posted a gain of 11.7 percent over last year, with a 74.5 per cent increase in non-residential permits and a 4.8 per cent increase in residential permits.
Across Canada, the value of permits declined three per cent to $4.9 billion, the third monthly decline in the last four months. The decline was the result of a drop in non-residential permits that was only partially offset by an increase, for the fourth consecutive month, in residential permits.
© The Vancouver Sun 2005