Sask. building permit values surge, but market still ‘under-performing’
|globalnews.ca 09 Oct 2019 at 16:47|
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Statistics Canada data shows a month-to-month jump in the value of Saskatchewan building permits , but experts warn against putting much stock in a single month of data.
Saskatoon & Region Homebuilders’ Association ( SRHBA ) CEO Chris Guérette characterized the Saskatoon as a “seriously under-performing market.”
“There’s less people working in our city, there’s less people paying taxes [and] contributing to our economy,” Guérette said.
Building permits are generally regarded as an indicator of economic growth, as permits are needed for any new residential or commercial construction.
From July to August, the value of Saskatchewan building permits jumped by 15.3 per cent, more than double the 6.1 per cent seen Canada-wide. Nationally, Canadian municipalities issued $9 billion of building permits in August.
Guérette said it’s not possible to draw a clear storyline from gains this summer, using the example of a 21 per cent decrease in permit values for Saskatoon and region single-family homes in 2019.
In the last two years, the industry has been “cracking underneath” government policies including the mortgage stress test and PST on construction contracts, Guérette said. The current Crown corporation strike is also a factor, according to the SRHBA CEO.
“Residential construction is really an industry that, although it’s quite robust, it’s really quite fragile,” Guérette said.
The jump from July to August is largely fueled by permits for multi-family homes like condominiums and duplexes in Saskatoon.
A separate Canada Mortgage and Housing Corporation (CMHC) report credited Saskatoon’s gains specifically to multiple apartment-style condos being built in the Brighton neighbourhood.
Year-to-date numbers for Saskatchewan’s largest city were still down 10 per cent from the previous year.
The CMHC data suggests the pace of new home construction has picked up in the last few months, according to senior analyst Goodson Mwale.
“There’s some resilience moving forward,” Mwale said, despite challenges around affordability and commodity prices.
So far this year, Mwale said, there have been just under 1,500 housing starts in Saskatchewan. It’s a roughly 31 per cent decline compared to just under 2,200 starts for the same period in 2018.