Canadian building intentions surged higher as the economy became more dependent on construction. Statistics Canada (Stat Can) data shows building permits surged higher in February. The optimistic rise for the industry is still mostly for the construction of new housing. However, a big (but temporary) boost resulted from rising government spending as well.
Canadian Building Permit Values Surge 21% Higher
Future building intentions climbed across Canada recently. The value of permits reached $12.4 billion in February, up 21.0% from the month before. It’s miles over the previous peak, but only 2.2% higher than the March 2021 peak when inflation adjusted. Inflation has played a significant role over the past year, which is obvious when charted.
Canadian Future Building Intentions
The combined seasonally adjusted value of Canadian residential and non-residential building permits in current and inflation-adjusted dollars.
Source: Statistics Canada; Better Dwelling.
Residential Building Intentions Are Getting Stronger
Residential real estate is still the majority of building activity, but not as much as usual. Building intentions for homes increased to $7.8 billion in February, up 9.8% from the previous month. It was boosted by a recent surge of single-family home building intentions. Now that households will move outside of big cities, they finally have demand.
Canadian Future Building Intentions
The seasonally adjusted value of Canadian residential and non-residential building permits, and their respective trendlines.
Source: Statistics Canada; Better Dwelling.
Non-Residential Building Intentions Boosted By One-Off Projects
Non-residential, commercial and institutional buildings saw a large uptick recently. Permits for this segment reached $4.9 billion in February, up 43.2% from the previous month. Non-residential building hasn’t seen a boost like housing did over the past few years. Stat Can attributes the boost to $1.9 billion in new hospital permits issued in BC and Quebec. Not exactly a sustainable boom, but a non-residential one — so it’s a start.
Building intentions across the country are up significantly, especially for non-residential construction. The boost was largely temporary, and not exactly a long-term change. Residential building on the other hand, is getting stronger with more housing demand. Though rising interest rates can slow down buying activity in just a few months.
You’re correct; Construction is the only economic trick the country has—$ Billions sitting idle in homes and very little going into innovation and long term jobs/careers. Every construction site is a temporary job, where workers limp away after age 40.
The big question will be, “Who will afford the homes built when the workers can no longer afford to carry a mortgage or pay the rent”? Currently, investors and banks see housing as an easy mark, promising ever-increasing prices. For those competing on the global stage, it isn’t so easy. Talent and low-cost producers still win on the international stage.