Canadian building permits rebounded in July after two months of declining values. This recovery was driven in large part by B.C., where permit values more than doubled on a monthly basis to $2.4 billion. All permit categories recorded substantial improvements during the month. That said, unadjusted for seasonality, year-to-date permits remain flat.
Monthly permit values tend to vary widely, but the 12-month moving average has not shown significant changes, as high construction and borrowing costs continue to weigh on sector activity. Further rate cuts will be necessary to support sustained activity growth in the sector.
Residential building permits in B.C. more than doubled in value to $1.6 billion. Multi-family permits rose by a substantial 152.1 per cent, while those for single-family dwellings saw a more modest increase of 34.7 per cent. Much of this growth was driven by an activity increase in the City of Richmond.
Meanwhile, non-residential permits increased by 99.2 per cent to $869.1 million. Within that category, industrial and institutional/governmental permit values rose by nearly five times the prior month’s value, and commercial permits were up by 30.8 per cent during the month.
Across B.C.’s census metropolitan areas, permits in Vancouver increased by 171.2 per cent in July and were up by 50.7 per cent year over year. Kelowna permits also increased by 22.4 per cent, while they rose in Kamloops by 16.3 per cent. Victoria’s permit issuances nearly doubled, and Abbotsford-Mission recorded a six-per-cent gain.
The Lower Mainland housing market failed to gain any traction in August even as interest rates continued to slip. MLS home sales remained low last month at a scant 2,921 units in Greater Vancouver and the Fraser Valley. This was 16.4 per cent below last year’s levels and the third-fewest same-month sales since 2010, unadjusted for the recent boom in population. On a seasonally adjusted basis, we calculate a nearly three-per-cent monthly decline, in line with levels observed through much of the year. While underlying demand remains elevated due to strong population growth and delayed homeownership, prospective homebuyers have stepped to the sidelines in anticipation of further rate cuts and improved affordability in coming quarters.
Sluggish home sales and elevated new listings are pushing housing inventories higher, providing more choice to buyers and, by extension, more negotiating power. At nearly 21,000 units, active listings were up 38 per cent from a year ago and were near 2019 levels on a trend basis. The region’s sales-to-active listings ratio fell to 13.8 per cent (or 16 per cent when seasonally adjusted), pointing to a shift into a buyers’ market. That said, buyers have been frustrated by rigid sellers anticipating higher demand as interest rates decline further. The average home value remained steady in August at $1.18 million following recent declines from a summer peak of $1.25 million.
We expect slow but steady market conditions to continue through much of the fourth quarter before a more vigorous pick up through 2025, specifically in entry-level markets. Lower interest rates and elevated net savings in recent years will trigger more purchasing activity, while transfers from parents and grandparents to younger buyers will increase with lower rates on savings vehicles. Prices are forecast to rise.
Bryan Yu is chief economist at Central 1
