Still more indication we’re in the grips of a slow down in the economy. On the heels of provincial numbers that developers are scaling back projects, specific numbers on what’s happening in metro Edmonton show in April May and June of this year, the number and value of building permits are off almost by fifty percent.
“Given the economic conditions that’s not terribly surprising,” said City of Edmonton economist John Rose. “Particularly on the housing sector. 2014 and 2015 were extremely strong years particularly for multi-family housing starts. What we’ve seen is a pull back in both the number of housing starts and in the value of building permits being issued.”
“We saw a real run up in apartments and condo buildings in the Edmonton region, in 2014-2015 so yes the numbers did have to come down. However I would point out the building permits numbers are down substantially and that means the slow down in the construction sector, particularly on the residential side will continue into 2017.”
“Builders in the Edmonton CMA took out permits worth $1 billion in Q2 2016,” Rose wrote in his news letter, “which is a 48% decrease from the $2 billion permit values seen in Q1.”
“Year-over-year, the value of building permits was down by 38% in Q2 2016 when compared to Q2 2015.
Construction intentions dropped on a quarterly basis due to decreased building permit values taken out in both the residential and non-residential sector.”
The reason for the drop, Rose said the break neck pace couldn’t possibly keep going over what we saw in the last two years. “We saw a real run up in apartments and condo buildings in the Edmonton region, in 2014-2015 so yes the numbers did have to come down,” he said. “However I would point out the building permits numbers are down substantially and that means the slow down in the construction sector, particularly on the residential side will continue into 2017.”
You’ll notice a difference in south Edmonton where they’ll continue to carry on, and downtown when things will start to slow. “Where a lot of the slow down in terms of new construction is going to occur is going to be more in the core of the city. There are a number of developments that are proposed and should get underway. When we get into 2017 you’re not going to see a whole lot of new development in the central part of the city.”
The pace of new Canadian residential construction eased last month following an unusually robust June, but still held up stronger than expected.
Canada Mortgage and Housing Corp. said the seasonally adjusted rate of housing starts in July was 198,395 units, down from 218,326 units the month before. Economists had estimated a decline to 195,000 units.
The good news out of that, if there is good news, Rose said once things start to pick up, there won’t be an over supply of product, and a resulting price crash. “There’s a lot concerns, particularly around Toronto and Vancouver, around where their housing market is going and are they in a bubble? Is there an over-build in condos particularly in Toronto. We’re not in that situation at all.”
CMHC also provides a six-month trend report, which increased to 201,936 units in July, up from 197,847 in June.
(sj-with files from the Canadian Press)