The building permit data for August 2024 shows stark regional disparities across Canada. While some areas are experiencing strong growth in construction intentions, others are seeing significant declines. This divergence is driven by a mix of local economic conditions, housing demand, and government policies, leading to differing outcomes across the country.
The total value of building permits in Canada fell by 7.0% in August 2024, with the residential sector decreasing by 5.2% and the non-residential sector by 9.7%. These national figures mask important regional differences that reveal how different areas are grappling with local challenges.
Alberta
Alberta emerged as a bright spot in the August 2024 building permits data, recording a 7.5% increase in total building permits. The province experienced strong growth in the residential sector, with an 8.4% increase in residential permits, largely due to the construction of single-family homes.
What’s Driving Alberta’s Growth?
- Population growth: Alberta is experiencing population increases, thanks to interprovincial migration and an affordable housing market compared to other parts of Canada.
- Energy sector recovery: The recovery of Alberta's energy sector is also fueling income and job growth, contributing to a boost in housing demand.
British Columbia
British Columbia, in contrast, saw one of the steepest declines in building permits, falling by 21.0% in August 2024. This was driven by a substantial 35.6% drop in non-residential construction, and a 12.2% decline in residential permits.
What’s Driving the Decline in British Columbia?
- Policy uncertainty: Changes in zoning and housing policies have created a more cautious environment for developers, contributing to a slowdown in new construction projects.
- Affordability issues: High real estate prices in cities like Vancouver continue to restrict demand for new housing developments, particularly for multi-unit housing.
Ontario
Ontario posted a 5.2% decline in building permits overall, driven mainly by a drop in residential construction. However, non-residential permits held relatively steady, falling by just 1.1%, supported by industrial projects, particularly in manufacturing and logistics.
What’s Driving Ontario’s Performance?
- Population growth: Ontario is still seeing population growth, driving demand for housing.
- Industrial growth: Major projects, such as the construction of electric vehicle battery plants, are driving industrial construction, helping to balance out the declines in the residential sector.
Quebec
In Quebec, total building permits fell by 2.1%, but the residential sector showed strength, with a 6.2% increase in permits. This growth was driven by demand in urban areas like Montreal and Quebec City, where housing is still in high demand.
What’s Driving Residential Growth in Quebec?
- Demand for urban housing: The demand for residential housing in Quebec's urban centers continues to drive construction, as more people move into cities.
- Government support: Investments in affordable housing and other residential projects by the Quebec government have helped to sustain growth in the housing market.
What’s Driving the Differences?
The regional disparities in Canadian building permits can be traced back to several factors:
- Local economic conditions: Regions like Alberta and Ontario benefit from stronger labor markets, particularly in sectors such as energy and manufacturing, which drive both residential and non-residential construction.
- Housing affordability: In high-cost areas like Vancouver, the high price of real estate limits the ability of developers to launch new projects, particularly in the multi-family housing market. This contributes to a more cautious approach from both buyers and builders.
- Government policies: Policy uncertainty and changes in housing-related legislation, especially in British Columbia, have contributed to slowdowns in building activity. On the flip side, provinces like Quebec are benefitting from government investments aimed at increasing affordable housing.
- Migration trends: Interprovincial migration patterns have played a major role in Alberta’s growth, as people seek more affordable housing and job opportunities compared to provinces like Ontario or British Columbia.
Conclusion
The building permit data for August 2024 highlights the stark contrast in construction activity across Canada’s provinces and cities. While Alberta and Quebec are showing resilience, driven by strong population growth and demand for housing, provinces like British Columbia are struggling due to policy uncertainties and high real estate prices. Ontario remains mixed, with industrial growth helping to offset declines in the residential sector.
As we move into the latter half of 2024, these regional disparities underscore the importance of localized housing and economic policies. By addressing the unique challenges each province faces, Canada can work toward a more balanced and sustainable housing market.
Source: Statistics Canada
The content of this article is for informational purposes only and should not be considered as financial, legal, or professional advice. Coldwell Banker Horizon Realty makes no representations as to the accuracy, completeness, or suitability of the information provided. Readers are encouraged to consult with qualified professionals regarding their specific real estate, financial, and legal circumstances. The views expressed in this article may not necessarily reflect the views of Coldwell Banker Horizon Realty or its agents. Real estate market conditions and government policies may change, and readers should verify the latest updates with appropriate professionals.
