The value of building permits in Canada grew to CA$10.14 billion in September, an 8.2% increase compared to August, driven by the increasing value of multi-family residential permits, according to data released by Statistics Canada on Tuesday.
That growth marks a reversal from the drop in residential permit value in August, but non-residential permit value went down by 3.2% in September.
The rise in residential permit value was driven by multi-family permits, especially high-value permits for condo buildings valued at over CA$300 million in Ontario.
On a year-over-year basis, third-quarter building permits actually saw a decline in real dollar value (adjusted for inflation) from the height of the construction craze in 2020. The nominal increase observed this month came as a result of high construction material and labor prices.
Building permit value serves as an indicator of future construction. While housing starts have been slowing down due to shortages of materials and labor, pushing prices up, building permits overall have stayed consistently higher than the pre-pandemic levels.
As demand for downtown office space stays low in the world of flexible work, construction efforts will shift away from commercial office buildings.
For decades, Canada has been adding more people than housing, leading to an immense shortage of residential housing across the country. With strong demand for residential buildings, construction companies will continue to capitalize on the opportunity to build and sell residential dwellings. The main barrier standing between developers and eager buyers is scarce construction materials and labor.