In December 2023, Canada’s building permit landscape witnessed a significant downturn, with a 14.0% decrease in total value compared to the previous month, marking the lowest monthly level since October 2020. This decline affected both residential and non-residential sectors, reflecting a broader economic trend.
The residential sector experienced a notable decline, with the total value of permits falling by 17.9% to $5.7 billion. This was primarily driven by a substantial drop in multi-unit construction intentions, which plummeted by 31.1%, representing the largest monthly decline in this series. Notably, Ontario witnessed a staggering 45.2% decrease in multi-unit permits, significantly contributing to the overall downturn in the residential sector.
However, amidst the overall residential decline, there was a glimmer of hope as permits for single-family dwellings edged up by 0.8% to $2.9 billion. Alberta stood out with a 15.3% increase, offsetting declines in seven other provinces. This increase marked the fifth consecutive monthly rise for Albertan single-family dwellings, reaching the highest monthly value since January 2014.
The non-residential sector also experienced a setback, with a 7.0% decrease in total permit value to $3.6 billion in December. This decline was mainly driven by a significant drop in institutional construction intentions in Quebec, which plummeted by 55.8%. The absence of new major institutional permits issued in December, following two substantial projects in November, contributed to this decline.
Zooming out to the quarterly trends, the fourth quarter of 2023 recorded the weakest aggregates since the third quarter of 2021. The total value of building permits in this quarter amounted to $31.3 billion, down 9.0% from the previous quarter. Both non-residential and residential sectors witnessed declines during this period.
In an annual review of 2023, despite a 3.2% decrease in the total current dollar value of building permits, the non-residential sector saw a third consecutive yearly increase, rising by 1.7% to $35.9 billion. The institutional and industrial components experienced series highs in construction intentions, driven by investments in hospitals and long-term care facilities.
The decline in building permits reflects broader economic uncertainties and challenges. Factors such as rising material and labor costs, supply chain disruptions, and policy changes may have contributed to this downturn. However, amidst the challenges, there are pockets of resilience, such as the growth in single-family dwelling permits in Alberta and the institutional construction boom driven by investments in healthcare infrastructure.
Looking ahead, policymakers and industry stakeholders need to closely monitor these trends and implement targeted strategies to stimulate growth and address sector-specific challenges. Initiatives aimed at supporting housing affordability, promoting sustainable development practices, and streamlining permitting processes could help revitalize the construction sector and drive economic recovery in Canada.