B.C. issues highest number of building permits since 2007 – Metro Vancouver Real Estate News July 2012
British Columbia municipalities issued building permits in the first five months of 2012 at levels not seen since before the global recession.
Up to May of this year, permits reached $4.4 billion in B.C., a level not seen since the same period in 2007 when permits were more than $5 billion, according to Statistics Canada figures.
Building permits â€” which indicate an intent to build, not actual construction â€” sunk to $2.4 billion in the first five months of 2009.
The value of building permits in May this year alone, at $1.09 billion, accounted for nearly half of the 2009 five-month total. The value of the May 2012 permits is an increase of 35.8 per cent over the same month in 2011.
The increase in the value of permits in May this year was even greater in residential construction in B.C., hitting $660 million, a 45.6 per cent increase from May 2011.
The increase in total building permits in the Vancouver metro area in May year over year jumped a whopping 112.3 per cent to $781.8 million, according to Statistics Canada.
“It’s a sign of optimism, certainly in the Lower Mainland. People don’t build or invest in construction services unless they are confident in the future,” said Independent Contractors and Businesses Association president Philip Hochstein.
“I think if you look around the world, British Columbia is a bit of an oasis in the [economic] storm … That’s translated into people interested in construction [here],” he said.
An indication of the construction interest â€” beyond the permit numbers â€” is the number of cranes that are going up in the Lower Mainland, added Hochstein.
The independent contractors association estimates the number of cranes will peak at 142 in the Lower Mainland in November 2013, well above the 78 cranes that were counted in 2005-2006 before the financial meltdown.
The Marine Gateway, located near the Canada Line on Marine Drive, and Telus Gardens downtown are among major projects announced recently.
Hochstein noted that with an average of 136 workers from the major trades working under each crane, more than 19,000 skilled workers would be on those construction sites.
Statistics Canada said the gain in building permits in May in B.C. was mainly attributable to multi-family housing and institutional building.
The Vancouver Regional Construction Association (VRCA) said notwithstanding external risks such as the European debt crisis, it is forecasting building permits to grow 10 per cent for the full year over 2011.
The association noted institutional construction in the Lower Mainland and southwest B.C., at nearly $200 million, reaching a level not seen since 1993.
“While we don’t expect monthly gains to continue at this level next month, these numbers are a positive indication for investment in the region,” said VRCA president Keith Sashaw.
Peter Simpson, president and CEO of the Greater Vancouver Homebuilders’ Association, said the reason B.C. is rebounding faster than other areas of the globe, including the United States, is because Canada suffered less under its more prudent banking system and many economic sectors in the province are firing on all cylinders.
“I think in many industries we’re going to have a shortage of skilled labour, and that will attract more people to come to our province as well,” he added.
Not all building construction observers are convinced there is reason for unbridled optimism.
Tsur Somerville, a professor at the Sauder School of Business at the University of B.C., said he finds it surprising residential permit levels in the Lower Mainland have increased.
Recent changes tightening mortgage down payments and the general economic climate are not likely to increase people’s interest in purchasing a home, said Somerville, the director of UBC’s Centre for Urban Economics and Real Estate.
During the global financial crisis, value of building permits in the Vancouver area dropped to a low of $300 million in May 2009.
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Source, Image: Vancouver Sun, Design.Shuffle