B.C. construction activity is set to dip this year after a business and government investment-led gain in 2012.
As expected, housing starts slowed in October following a September bump in activity. Starts in B.C.'s urban markets pulled back to a seasonally adjusted pace of 23,900 units, marking a 19% drop from September as fewer apartment projects got underway. While the infrequency of their construction and high number of units associated with individual multi-family projects contribute to significant volatility in monthly figures, October's drop suggests a softening in construction activity – a trend also evident in September building permits.
Following an August uptick, residential permit volume retreated in September. Total volume fell to a seasonally adjusted $513.1 million during the month, down 14% from August on lower volume in both the single and multi-family sector. Through three quarters, residential building intentions were about 3% lower than in the same period in 2012. A decline in permits to the weaker levels of late-2012 points to a slowdown in new home and renovation construction in the fourth quarter.
A slowdown would be consistent with a sluggish economy, expected moderation in the resale market and elevated (albeit declining), levels of new home inventory in markets across the province. Full-year starts are forecast to end the year at 25,800 units, down 6% from 2012 before advancing 4% in 2014.
In contrast to a housing market slowdown, non-residential permit volume bounced higher in September following an August contraction. Municipalities issued permits valued at $326.5 million, marking a monthly gain of 10% and in line with 2013 highs.
Stronger public-sector activity offset a decline in the industrial space. Volume has generally climbed since the end of 2012.
Despite this positive trajectory, year-to-date activity was still down 25% from the first three quarters of last year, reflecting fewer major project starts while a challenging economic environment has likely curtailed some business and government investment spending this year.
Annual non-resident permit volume is forecast to settle at 20% below last year's levels, but remain above levels observed between 2009 and 2011. •
