Building permits rise on strong non-residential numbers

House-building intentions continued to slow in March, but the construction industry as a whole still looked strong thanks to plans for new institutional and commercial building.

OTTAWA — House-building intentions continued to slow in March, but the construction industry as a whole still looked strong thanks to plans for new institutional and commercial building.

Statistics Canada said Monday that building permits rose an above-consensus 4.7 per cent to $6.8 billion for the month, following a 7.6 per cent gain the previous month.

Economists had expected a more modest 1.5 per cent increase.

But all the action was on the non-residential side. Institutional building intentions rose a stunning 88.4 per cent, mainly for government buildings and medical facilities in Ontario. Meanwhile, the value for commercial buildings rose by 15.3 per cent.

Overall, non-residential intentions were up 13.9 per cent to $2.9 billion as the industrial component fell 42.8 per cent.

But the value of permits for the larger residential construction sector slipped by 1.3 per cent to $3.9 billion, the sector’s third consecutive month of decline. Single-family dwelling permits fell by 1.7 per cent and multi-family housing by 0.7 per cent.

In actual dwellings, permits issued rose 2.1 per cent to 17,650 in March.

On a year-over-year basis, the value of residential permits was down slightly — 0.2 per cent — while non-residential permits were up 3.3 per cent.

Permits are an indication of future construction and March’s numbers appeared in line with a softening trend in Canada’s housing sector, with sales and prices flattening.

“Although housing starts data have been buoyant lately, the recent softening trend in residential permits suggests that the pace of home building may slow in the months ahead,” said CIBC economist Emanuella Enenajor.

The housing market has been fuelled by historically low interest rates, but recent trends suggest the inducement may have reached a limit given that both home ownership rates and debt are at record levels.

The Bank of Canada and federal Finance Minister Jim Flaherty recently stepped up their warnings to Canadians to moderate their borrowing on real estate, declaring household debt the domestic economy’s number one enemy.

The finance minister has also announced changes to the Canada Mortgage and Housing Corporation designed to tighten controls on lending.

In March, the value of residential permits declined in six of the 10 provinces, led by Ontario.

Total permits — including non-residential — were up in eight provinces, with Ontario realizing the biggest gains on the non-housing side.

Newfoundland and Alberta posted the second and third highest gains respectively.

British Columbia posted the biggest dip in intentions as a result of lower construction plans for industrial and commercial buildings, and for multi-family dwellings. Quebec reported decreases in every component except for single-family dwellings.

The value of permits rose in 23 of Canada’s 34 metropolitan areas, with the largest gains in Toronto, Winnipeg and St. John’s.

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