Building in B.C. cities collapsed by 15% in October, figures show
But building industry body says the seasonally adjusted plunge could be a simply a 'blip'
December 7, 2004
CREDIT: Peter Battistoni, Vancouver Sun
Framers work to finish a home in North Surrey. Applications for building permits are down for October, but Greater Vancouver Home Builders Association chief Peter Simpson (front) says the market remains strong.
The value of building permits issued by B.C. municipalities dropped by a seasonally adjusted 15.5 per cent in October from September, while the national average increased by two per cent, Statistics Canada reported Monday.
The value of permits issued in Vancouver took an even bigger drop -- 18 per cent -- while Abbotsford in the Fraser Valley recorded a whopping 32.8-per-cent decline.
That compares with increases of 12.1 per cent in Toronto and 5.8 per cent in Montreal. Ontario reported an average 6.6-per-cent gain ,while Quebec saw a 0.9-per-cent increase.
Greater Vancouver Home Builders' Association chief executive officer Peter Simpson said that the B.C. drop appears to be a one-month blip and that there's nothing yet to indicate a trend.
"There are no alarm bells just yet," Simpson said in an interview. "We're seeing a slowdown [of visitors] at the home sites, but it's likely because of the season, not the market. But if it [the drop in permits] continues to the end of February, then we'll have to reassess it."
Simpson noted that from January to the end of October, housing starts were up 22 per cent in B.C. over the same 10 months in 2003.
He also said there there was a huge surge in housing permits this summer, as developers tried to beat a deadline for higher development fees imposed by the city of Vancouver.
"And [Canada Mortgage and Housing Corp.] predicted that for the entire 2004 there would be 16,600 starts. By the end of October, we've reached 16,350. So we'll be over that prediction and CMHC predicts that in 2005, B.C. will be the only province to record an increase in housing starts."
As well, Simpson said, the housing supply is still tight in the Lower Mainland, "with very limited inventory out there that's not sold."
According to the Statistics Canada survey, the value of construction permits across Canada increased for the first time in four months in October in the wake of strong demand for new single-family dwellings in the housing sector. Municipalities issued $4.6 billion in building permits, up two per cent from September, after three consecutive monthly declines.
The survey noted that on a year-to-date basis, municipalities issued $45.5 billion of permits, up eight per cent over the first 10 months of 2003.
Vancouver recorded a 34.4-per- cent increase in the value of building permits from January to October 2004 over the first 10 months of 2003.
In B.C. as a whole, the value of residential building permits dropped 3.6 per cent, and non-residential dropped 47.9 per cent.
In dollar terms, B.C. posted the most significant decline in October for residential permits, from $479 million to $462 million. B.C. also recorded the largest decrease in dollars in non-residential construction.
However, from January to October, B.C. recorded an increase in the value of building permits by 25.8 per cent, to $6.6 billion, over the same period last year.
Residential permits in B.C. rose 35 per cent to $4.98 billion over the same period, while non-residential permits rose 4.1 per cent to $1.64 billion.
The survey noted that the metropolitan areas of Vancouver and Montreal recorded the largest increases (in dollars) on a year-to-date basis, "in both cases because of a feverish demand for new dwellings."
The survey said that between January and October, the value of permits issued for single-family dwellings in Canada totalled $20.4 billion, up 12.8 per cent from the same period in 2003.
The value of commercial permits in Canada fell 0.6 per cent to $881 million, the second straight monthly decline. The biggest drop was in B.C., where commercial permits plunged 45 per cent.
Regionally, Edmonton recorded the strongest increase in non-residential permits of all metropolitan areas (up 128.7 per cent to $88 million). However, 15 metropolitan areas recorded monthly declines, with the largest drop in Vancouver.
Etienne Saint-Pierre, of Statistics Canada's investment and capital stock division, agreed in an interview that October might just be a blip for B.C. He also said that the sharp drop in non-residential permits may not be that significant.
Saint-Pierre said that the total value of permits for October in B.C. was $552.9 million -- up from 2003's average of $532.9 million per month. "The level (of permits) remains high and the B.C. economy is doing well."
Monday's survey follows reports from Credit Union Central of B.C. last week that B.C.'s hot housing market has cooled more quickly than expected, which should hold sales, housing starts and the Lower Mainland's average prices below 2004's torrid highs throughout 2005.
Credit Union Central chief economist Helmut Pastrick said with October property sales in the Lower Mainland down 30 per cent from the March peak, he believes the market is going through an adjustment, but not an outright correction.
LICENCE TO BUILD:
The value of building permits issued by Canadian municipalities rose by two per cent from September to October. Here’s a sampling of the changes in major Canadian metropolitan areas:
VALUE OF BUILDING PERMITS, % CHANGE SEPT. TO OCT. 2004
© The Vancouver Sun 2004