CAD: Canada’s Building Permits Fall Nearly 12% in March
The Canada Building permits for the March month declined to 11.7% and expected drop is 4.3% and 9.3% rise in the February month. The Housing starts declined to 7% in the March and Six month average decline is 1.6%. YoY basis fallen to 15.2% and Quarterly basis 3.7% up from the previous quarter printed. Higher rates prevailing in the Canada Economy arrested the Building permits to House construction of People due to higher loan rates for construction.
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In March, Canadian building permits experienced a notable decline, eroding the modest rebound observed for the quarter, primarily driven by a surge in commercial construction plans.
Statistics Canada reported on Monday that the total value of building permits plummeted by 11.7% from the previous month to a seasonally adjusted 10.53 billion Canadian dollars, equivalent to $7.70 billion. This contraction was sharper than the anticipated 4.3% decline forecasted by economists at TD Securities and followed a 9.3% increase in permit values recorded in February. On a year-over-year basis, the overall value of permits issued in March witnessed a significant drop of 15.2%.
However, despite the monthly setback, the value of building permits for the first quarter of the year exhibited a 3.7% increase from the preceding quarter, reaching approximately C$33.4 billion. This improvement comes after a period of weakness in the fourth quarter of the previous year, marking the lowest quarterly total since the third quarter of 2021, as highlighted by Statistics Canada.
Building permits serve as an early indicator of construction activity in Canada and are derived from a survey of 2,400 municipalities, representing 95% of the country’s population. It’s important to note that the issuance of a permit does not guarantee immediate commencement of construction.
Additionally, housing starts experienced a decline of 7% in March, with a six-month trend indicating a 1.6% decrease, according to data released by Canada Mortgage and Housing Corp. The agency forecasts a decline in housing starts this year following historically high levels in recent years, influenced by the lagging effects of higher interest rates on new construction.
Specifically for March, the value of building permits was 16.7% lower than the previous month, totaling C$4.0 billion, as per the data agency’s report. Furthermore, construction intentions in the residential sector retreated, with permits decreasing by 8.3% to C$6.53 billion. Within the residential segment, intentions for multifamily dwellings declined by 9%, while those for single-family homes were down by 7.4%.
However, for the quarter, the value of residential building permits experienced a modest increase of 1.8%, with growth in multi-unit intentions partially offset by declines in single-family homes. Intentions in the non-residential sector saw a more robust increase of 6.9%, driven by plans for commercial building, which reached the highest level in the past four quarters due to growth in permits for office buildings.
CAD: March 2024 Building Permits
In March, building permits in Canada experienced a sharp decline of 11.7%, a figure significantly higher than the anticipated drop of 4.3%, following a notable increase of 9.3% in February. Concurrently, housing starts witnessed a decline of 7% in March, with a six-month average decline of 1.6%. On a year-over-year basis, housing starts fell by 15.2%, while on a quarterly basis, there was a modest increase of 3.7% compared to the previous quarter.
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The prevailing higher interest rates in the Canadian economy have impacted the construction sector, leading to a slowdown in building permits for housing construction. The increased cost of borrowing for construction purposes has deterred individuals from initiating new housing projects, contributing to the decline in building permits.
In March, the total value of building permits in Canada experienced a notable decline, falling by 11.7% to $10.5 billion compared to the previous month. Within this, the non-residential sector saw a significant drop of 16.7% to $4.0 billion, while the residential sector decreased by 8.3% to $6.5 billion. Notably, all components except for the commercial sector witnessed declines.
On a constant dollar basis (2017=100), the total value of building permits decreased by 11.6% in March, following two consecutive months of increases.
Within the non-residential sector, construction intentions declined across the industrial (-46.1%; -$629.8 million) and institutional (-22.2%; -$293.1 million) components. However, the commercial component partially offset these declines by growing 5.8% to $2.2 billion.
In the residential sector, Ontario led the downturn with a decrease of 13.7% ($377.4 million), impacting both single-family and multi-family dwelling permits. Despite this, the residential sector saw growth in Quebec (+7.3%; +$90.1 million), Prince Edward Island (+70.4%; +$14.3 million), Saskatchewan (+10.3%; +$6.3 million), Newfoundland and Labrador (+7.7%; +$2.2 million), and Manitoba (+0.9%; +$1.4 million).
During March, 16,800 new multi-unit dwellings and 4,200 new single-family homes were authorized across Canada. From April 2023 to March 2024, a total of 260,200 new units were authorized.
Despite the monthly downturn, the first quarter of 2024 witnessed a rebound in the total value of building permits, reaching $33.4 billion, a 3.7% increase from the previous quarter. This recovery follows a period of weakness in the fourth quarter of 2023, marking the lowest quarterly total value since the third quarter of 2021 ($30.5 billion). The growth was primarily driven by British Columbia (+20.1%; +$988.4 million), which saw significant gains in the commercial and industrial non-residential components, as well as in the multi-unit residential component.
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Construction intentions in the non-residential sector increased by 6.9% to $13.0 billion in the first quarter, with the commercial component posting the highest level in the previous four quarters, driven by permits for office buildings. Overall, nine provinces and territories reported increases in commercial construction intentions, led by Ontario (+34.8%; +$710.1 million), Quebec (+31.2%; +$296.6 million), and British Columbia (+32.4%; +$269.3 million).
Meanwhile, the value of residential building permits edged up by 1.8% in the first quarter, with growth in the multi-unit component partially offset by declines in single-family homes.
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