Canadians invested less in building and improving real estate last year. Statistics Canada (Stat Can) data shows the value of residential building permits dropped in November. The declines are being seen across Canada, but Toronto and Vancouver are seeing larger declines.
Canadian Residential Building Permit Value Down Over 1% YTD
The value of residential building permits across Canada are falling compared to last year. The total value of permits reached $4.734 billion in November, down 3.98% from the month before. This represents a decline of 6.86% from the same month last year. Stat Can attributed the decline to multi-family homes.
Canadian Residential Building Permits
The monthly dollar value of residential building permits across Canada’s largest cities.
Source: Stat Can, Better Dwelling.
The size of the 12-month decline is bigger than the month before, but year-to-date (YTD) isn’t as bad. Residential permits came in at $56.59 billion YTD in November, down 1.74% compared to the same period last year. Lower, but not quite as low as the monthly number may suggest.
Toronto Residential Building Permit Value Down Over 5% YTD
Residential building permits for Toronto are more volatile these days. The total value reached 854 million in November, up 7.70% from the month before. This represents a decline of 9.3% compared to the same month last year. The monthly swings in Toronto have been incredibly volatile this year.
Toronto Residential Building Permits
The monthly dollar value of residential building permits in Greater Toronto.
Source: Stat Can, Better Dwelling.
Even though there was a big increase in the latest month, Toronto’s YTD numbers were still lower. The YTD total of permits reached $10.25 billion in November, down 5.04% from a year before. This is more than double the national average.
Vancouver Residential Building Permit Value Down Over 6% YTD
Vancouver residential building permits are down anyway this number is cut. The total value reached $398 million in November, down 28.95% from the month before. This represents a decline of 36.27% compared to the same month last year. Before you ask, it’s not a monthly skew either.
Vancouver Residential Building Permits
The monthly dollar value of residential building permits in Greater Vancouver.
Source: Stat Can, Better Dwelling.
The whole year was kind of bust for permit values across Vancouver. The YTD value of permits fell to $7.124 billion in November, down 6.65% compared to a year before. The decline brings the level closer to pre-2015 levels of investment – before the boom.
Lower residential building permit value is an issue across most of Canada. The trend is moving much faster in Toronto and Vancouver though, cities that saw a boom of construction. The levels appear to be moderating along with the expansion of household credit.
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Doesn’t this mean houses will be more scarce?
Yes, it’s a follow up piece to the article they wrote a couple of days ago on the Toronto real estate Inventory declines in December.
Existing Inventory is falling and now new construction inventory is set to fall (permits).
Depends on the why.
If major developers foresee a slowdown in buying the likely yes if they overestimate the slowdown.
If investors are losing interest in demo rebuilds then no.
If builders are simply already holding enough permits then no.
It is never a matter of A means B in business. It’s more like: if A, what are the possible outcomes based on variable input of others.
Still plenty of supply in the pipeline. City of Toronto estimates there are “140,441 approved but unbuilt residential units and an additional 167,309 units currently under review”
https://www.toronto.ca/legdocs/mmis/2019/cc/bgrd/backgroundfile-133165.pdf
An excellent point for everyone to remember John, thank you.
A knock-on effect of lower investment is normally lower jobs growth (or even net losses) in a given industry (and don’t forget the economic multiplier) and potentially impact to the current record net immigration we’re seeing.
It doesn’t take huge swings just a couple small ones all swinging the same way.
All I see in Vancouver is a highly inexplicable decision by developers to go all in during a market downturn and in April 2019, double or triple the permit revenues.