Canadian building permits dropped again in June by 13.9%, continuing the trend of a softening property market despite the government’s attempts to accelerate housing development.
According to Statistics Canada, the decline in June was even greater than the previous month, which saw permits drop 12.2% in May and the data is even worse on a year-over-year basis, where the overall value of permits issued in June has dropped by 21.6%.
Building permits help to provide an indication of construction activity and Statistics Canada surveys 2,400 different municipalities which account for 95% of the country’s population.
However, building permits do not guarantee that construction will be completed.
The Conservatives slammed the Trudeau government’s housing strategy, calling it a “$4 billion photo op housing fund [that] doesn’t get homes built.”
“Trudeau continues to reward city gatekeepers who block housing and he continues to spend more money than any other OECD nation on housing only to get the worst results,” Conservative Shadow Minister for Housing Scott Aitchinson told True North.
“Trudeau’s housing Minister admits that their $4 billion photo op housing fund doesn’t get homes built yet they continue to use the same failed strategy hoping for a different result.”
Building permits fell across both residential and nonresidential sectors.
“The total value of residential permits decreased 11.5% to $6.5 billion in June. Overall, 9 of the 13 provinces and territories contributed to this decline in residential permits,” Statistics Canada wrote.
Provincially, Ontario and British Columbia saw the largest decline in multi-family dwelling permit values, with Ontario reporting the largest monthly decrease since December 2023.
“The total value of non-residential sector permits decreased 18.1% to $3.5 billion in June 2024,” reads the data. “The industrial component dropped 42.6% (-$447.2 million) in June, following a 21.3% increase in May.”
Housing starts also fell 9% in June, according to the Canada Mortgage and Housing Corporation, with a 0.4% average drop across the last six months.
“The actual number of housing starts across Canada in urban centres of 10,000 population and over was down 13% to 20,509 units in June compared to 23,518 units in June 2023. The year-over-year decrease was driven by lower multi-unit starts, down 16%, while single-detached starts were similar to last June,” reads the CMHC news release.
“June’s total actual housing starts were markedly lower in two of Canada’s three major cities compared to June 2023, with Toronto down 60% and Vancouver down 55%.”
CMCH’s chief economist Bob Dugan said that the “higher interest rate environment appears to have caught up with some of Canada’s major centres as lower multi-unit starts.”
However, the Bank of Canada cut its key interest rate in June, becoming the first Group of Seven central bank to do so and followed up with a second rate cut in July as inflation has continued to ease.
These cuts are expected to help incentivize housing market activity.
Yet despite the first interest rate cut in June, building permits continued to be issued in a declining trend.
The Liberals’ 2024 budget pledged to invest $8.524 billion over the next five years in various housing measures. The feds have pledged to build 3.87 million homes by 2031.
However, that promise would require Canada to build 1.096 houses every minute from the announcement of the budget until 2031.
If elected, the Conservatives have pledged to cut red tape and give cities and municipalities financial rewards from a federal pot if they meet their intended housing targets and penalties if they don’t.
“Common Sense Conservatives will require municipalities to remove gatekeepers and to build 15% more homes every year, providing a building bonus for exceeding the target or imposing a fine if they don’t,” said Aitchison.
“We will also cap wasteful inflationary government spending and fix the budget to bring down inflation and interest rates so builders can build the homes Canadians can afford.”