Record permit values in ’21 driven by increases in material, labour prices
Don’t be confused by the record value of building permits issued across the country in 2021, Statistics Canada cautions.
While permit values rose by an unprecedented 25.6 percent to $126.5 billion for the year, two-thirds of that increase was due to rises in material prices and labour costs. On a constant dollar basis, the value of permits rose by a much more modest 9.3 percent to $88.5 billion.
For the entirety of 2021, residential permit values rose by just shy of 30 percent to a record $87.2 billion. Single-family permit values jumped 41.5 percent to $40.7 billion. The 81,000 new units under construction last year was the highest total recorded since 2013. Multi-family permit values also hit a record high for the year, rising 21.1 percent to $46.5 billion.
In both residential subsectors, the largest regional increases were recorded in smaller cities. For single-family homes, for example, Peterborough (+134.1 percent), Barrie (+107.5 percent) and Oshawa (+79.0 percent) reported the greatest gains nationally. Kelowna (+175.1 percent), Lethbridge (+159.0 percent) and Saguenay (+145.1 percent) reported the highest gains among multi-family construction intentions.
Both increases were directly associated to higher prices for housing in major urban centres, as well as continued work-from-home dynamics caused by the COID-19 pandemic.
The value of permits in the non-residential sector in 2021, meanwhile, was up 17.1 percent to $39.6 billion. Again, in keeping with pandemic-led trends, only the institutional component exceeded pre-pandemic levels, while the commercial and industrial components were both roughly 8 percent below 2019 totals.
December values contract
Permit gains recorded for 2021 would have been higher, but for a slight decline in activity in December.
The total value of permits issued in the final month of last year dropped 1.9 percent to $11.2 billion. Both the residential and non-residential sectors reported declines.
The value of residential permits dropped 2.7 percent to $7.7 billion following a strong November. Multi-family construction intentions fell 6.0 percent to $4.1 billion, while intentions for single-family homes rose 1.3 percent to $3.6 billion.
Overall, the total value of non-residential permits, meanwhile, remained unchanged at $3.4 billion. Movements within the various components cancelled each other out.
The total value of commercial permits fell 7.9 percent to $1.9 billion in December. Intentions in the industrial sector rose 8.4 percent to $762 million, while the value of institutional building permits increased 17.2 percent to $720 million.
Fourth quarter activity hits new heights
The total value of building permits in the fourth quarter of 2021 jumped 10.3 percent to a new high of $33.1 billion. This surpassed the previous record of $31.5 billion set in the first quarter of 2021.
The residential sector increased sharply by 11.9 percent to a record $22.7 billion, contributing almost four-fifths of the overall total building permit value increase. Both permit values for multi-family and single-family components rose strongly compared with the third quarter, with the multi-family component exceeding $12 billion for the first time.
The non-residential sector rose 7.0 percent to $10.4 billion in the fourth quarter, 2.3 percent below the pre-pandemic peak set in the fourth quarter of 2019. Commercial permits were up 9.9 percent to $5.9 billion, while institutional and industrial permits rose 3.1 percent and 4.0 percent, respectively.