Canada

Canadian Building Investment Drops For The Third Month Due To Housing

Canadian building investment is falling, and it’s due to a lack of housing investment. Statistics Canada (Stat Can) data shows total building investment fell in July. Taking a dive into the data, we can see this is due entirely to falling residential investment. While it dropped, no need to worry about an inventory squeeze. The amount of capital sunk into residential building construction is still very high.

Canadian Building Construction Investment Fell 1.7%

Building construction investment made a sharp drop, but is higher than usual. The value of investment reached $18.1 billion in July, down 1.7% from the previous month. Compared to last year, this represents an increase of 17.6% — still a substantial increase. It wasn’t due to a base effect either, with last July coming in fairly close to the year before. Stat Can attributes the drop to housing investment, which weighed on the total index.

Canadian Residential Construction Slows For A Third Month

Residential building construction is spiraling lower, as new housing demand softens. The total of residential investment fell to $13.4 billion in July, down 2.6% from the month before. Single-family construction investment represented $7.2 billion, down 4% over the same period. Multi-family (a.k.a. condo apartments) fell to $6.2 billion, down 0.9% from last year. The whole drop in building construction is due to just these segments. 

Canadian Residential Building Construction Investment

The monthly dollar value of residential building construction in Canada, by housing segment.

Source: Stat Can; Better Dwelling.

Residential Housing Investment Slows, But It’s Still Elevated

Oh, no! What about the lack of supply, right? Well, lower than peak growth isn’t exactly the same as less development. Single-family investment is still 35.3% higher than last year, and multi-family is 21.4% higher. Investment is still significantly elevated, it’s just cooling to more sustainable levels. 

Lower monthly growth and higher annual growth is a bit of a mixed read, but it makes sense. Falling monthly investment is still a slowdown and a drag on economic growth. The falling growth will probably lower input costs, such as labor and materials. In terms of total supply coming to market, it’s likely not that big of a concern. It’s significantly elevated from previous years. 

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7 Comments

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  • Jupiter 4 weeks ago

    Well, when those 1.3 million immigrants come we are going to see a demand surge. Home prices are going up everywhere.

    • Barrett 4 weeks ago

      You’d have to have something seriously wrong with you if you’re an immigrant coming to Canada right now. And I say this as someone who immigrated to Canada 20 years ago, and saw it turn into an exploitative and predatory system that feeds off of immigrants.

      We might as well be blood boys to these polticians.

      • We are the best 4 weeks ago

        Brainwashing new slaves into number one country in the world in everything.
        We are the best in education. We are the best in housing. We are the best in household incomes. We have the best free health care. We have the best job market. We have the best prices of goods. We have the best taxes. The best and most educated women and men. The most good-looking prime minister. We have the best eco system.

    • alex 4 weeks ago

      Except immigrants aren’t coming in numbers to even come close to that quota, and new foreign ownership is going to be banned for 2 years, and the BOC is going to finish tapering bond purchases by mid 2022, and the Fed will begin tapering within the next 3 months, and interest rates + mortgage rates are going to start to tick higher, and debt relief benefits + eviction moratoriums are going to end within the next 1-3 months, and our economy is shrinking, and we’re seeing a huge surge in residential real estate development, and demand for credit is beginning to dry up.

      Excuse the run on, but for the sake of setting an example, there is way more downside coming our way than upside.

    • D 4 weeks ago

      Canada’s currency is depreciating. It’s either Canada saves its currency that has never defaulted since its first issuance or save a bubble.

    • Sn 4 weeks ago

      Tell that to the residential housing investors! Why do you think they’re not seeing this?

  • John 4 weeks ago

    You will own nothing be happy

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