Building permit values tumble 21 per cent
October's figure of $61.1 million sank from $77.4 million in September
Carla Wilson
Times Colonist
Friday, December 05, 2008
Greater Victoria's total building permit values dropped 21 per cent from September to October to $61.1 million, Statistics Canada said yesterday in its first measure of construction intentions since the beginning of the economic turmoil.
The latest figure for the capital was down from $77.4 million in September and this year's peak in August of $125.2 million.
Builders took out $756.2 million in permits in the capital region from January through October, a slide of 7.6 per cent for the same months last year, Statistics Canada said yesterday.
Non-residential permit values slumped by 33.6 per cent from September to October and residential permits slid by 31.3 per cent.
Nationally, the value of permits decreased 15.7 per cent to $5.4 billion last month from September. B.C. was down by 5.2 per cent to $863.4 million, Statistics Canada said.
Construction intentions fell in both the residential and non-residential sectors, and in all provinces except Quebec and Newfoundland and Labrador.
In a separate report, B.C. is considered the third-best place to invest in the country, following Alberta and Saskatchewan, according to a new report from the Vancouver-based Fraser Institute.
B.C.'s major projects inventory released this week showed that $175 billion worth of projects are either being built or are planned.
Currently, 379 developments worth nearly $66 billion are underway and the construction sector is cheering any government plans to support infrastructure programs.
Greg Baynton, president of the Vancouver Island Construction Association, said 2009, "could be a challenging year" but is more optimistic about prospects for 2010.
Residential construction could be "extremely slow" next year and although the commercial sector will be impacted, it won't be hit as hard, he said. The region's construction sector is coming off a building boom that lasted several years.
Despite Victoria's low vacancy rate, it seems unlikely that builders will turn to rental projects because land and development costs are still high, Baynton said.
Terry Siklenka of Accutemp Refrigeration and Air Conditioning Ltd., a past chairman of the construction association, agreed, saying, he couldn't see rental construction increasing "without some kind of subsidization."
Suppliers to Accutemp, which provides heating, ventilation and air conditioning products, have announced price increases of 15 to 20 per cent, he said.
All provinces, other than Manitoba and Newfoundland and Labrador, saw a decline in single-family permits in October.
The largest dollar declines were in Alberta and in B.C., where residential permits dropped to $428.1 million, a 26 per cent decrease from the previous month.
However, non-residential construction such as commercial projects, hospitals and schools leaped by 32.4 per cent in October, coming in at $844.1 million.
Across Canada, municipal permits for multi-family projects tumbled 10.9 per cent last month, reflecting the third drop in a row. British Columbia was responsible for most of the decline, Statistics Canada said.
Philip Hochstein, president of the Vancouver-based Independent Contractors and Businesses Association, said as economic uncertainties continue to hamper the housing market, "we are not surprised to see a continued decline in residential building permits."
"However, the increase in building permits for the commercial sector does show that B.C. may be better positioned than other provinces to weather the storm ahead."
"It [construction] clearly will erode over time as there doesn't look to be as much work coming forward," he said. He too does not expect builders to turn to rental projects, citing factors such as difficulty in getting financial backing and current rental rules regarding tenants.
Hochstein said 2009 will be a difficult year, but the impact will be softened for those builders who still have a backlog of work.
The biggest hit to the sector will come in 2010 unless economic problems turn around, he said.
cjwilson@tc.canwest.com
© Times Colonist (Victoria) 2008
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