After a year of consistent interest rate hikes and stubbornly high inflation, housing construction slowed across Canada in December.
According to recent data from Statistics Canada (StatCan), the total value of building permits issued in December fell to $10.3B, a monthly decline of 7.3% and down 9.3% from a year prior.
The residential sector accounted for much of the decline, with the total value of permits dropping 8.4% month over month to $6.5B -- an annual decline of 14.6%. Newly created residential units totalled 19,346, marking an 11.1% drop from November.
Quebec contributed to much of the decline in the multi-family component (down 11.6% nationally), with permit values falling 43.4% after a "strong" November. In contrast, New Brunswick and Saskatchewan posted notable gains of 46.4% and 36.9%, respectively, in December. Canada-wide, permits to build single-family homes were down 3.9%.
Interest rate hikes, of which there were seven in 2022, impact construction timelines by increasing project costs and constraining developers' and buyers' ability to secure financing, StatCan noted.
Construction intentions in the non-residential sector slowed month-over-month in December, too, albeit by a more modest 5.3%. At $3.8B, total values were up 1.6% from a year prior, though. StatCan noted that the monthly decline of 24.1% seen in Ontario "more than offset" the gains experienced in seven other provinces.
In the industrial sector, construction intentions decreased 23.4% from November to December, while the value of commercial permits climbed 2.2%. Alberta was at the helm within the latter due to a number of large permits issued in Calgary.
Nationally, the total value of institutional building permits edged up 0.9% month over month in December. Although Ontario experienced a notable loss of 30.1%, significant gains were seen in Manitoba (228.6%) and Saskatchewan (333.8%) due to building permits for new hospitals. Quebec also experienced a marked monthly increase of 45.1%.
StatCan
On a quarterly basis, the total value of building permits fell 7.8% in Q4 2022 to $31B. Once again, the residential sector accounted for the majority of the decline, dropping 13.0% to $19.8B. The only province to experience gains was Newfoundland and Labrador.
Meanwhile, permit values in the non-residential sector jumped 2.9% in Q4 to $11.2B. The industrial component increased by 29.5%, reaching a quarterly high of $2.8B, while institutional permit values fell by 12.3%, marking the third consecutive quarter of decline. Commercial intentions held steady with a 0.3% increase.
Looking at 2022 as a whole, the total current dollar value of building permits increased 6.8% annually; however, StatCan noted the increase was "largely the result of inflated valuations from persistent material and labour cost increase." Adjusted on a constant dollar basis, the total value dropped 6.6%.
