Canadian building permits saw a significant decline in March, according to data released by Statistics Canada on Monday. The total value of permits fell 11.7% compared to February, reaching a seasonally adjusted C$10.53 billion. This drop was steeper than the 4.3% decrease anticipated by economists.
This decline follows a 9.3% increase in February and marks a 15.2% decrease year-over-year. However, the first quarter of 2024 still showed a modest gain of 3.7% compared to the previous quarter.
Building permits are an indicator of future construction activity. It's important to note that a permit being issued doesn't guarantee immediate construction.
Housing Starts Also Show Decline
Data from Canada Mortgage and Housing Corporation (CMHC) revealed a 7% decrease in housing starts for March. The six-month trend indicates a 1.6% decline overall. CMHC forecasts a decrease in housing starts for 2024, following record highs in recent years. This is likely due to the impact of rising interest rates on new construction.
Residential and Non-Residential Sectors Breakdown
The value of residential building permits in March fell 16.7% compared to February, reaching C$4.0 billion. Permits for both single-family and multi-family dwellings saw declines of 7.4% and 9%, respectively.
Looking at the first quarter, residential permits edged up 1.8%. Growth in multi-unit permits was offset by a decrease in single-family home permits.
The non-residential sector, on the other hand, showed a 6.9% increase in permit intentions. This growth was driven by commercial building, which reached its highest level in the past four quarters, with a surge in permits for office buildings.
Impact on Kelowna Real Estate Market
A decrease in building permits nationally can influence the Kelowna real estate market in a few ways. A decline in permits suggests a slowdown in new construction, which could tighten housing supply in the long term. This, in turn, could put upward pressure on housing prices, particularly for single-family homes, which saw a steeper decline in permits compared to multi-unit dwellings.
Coldwell Banker Horizon Realty will continue to monitor these trends and provide updates on how they, along with local data, impact the Kelowna market conditions.
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