In Canada, the value of building permits have increased by 8.6% during March, surpassing all expectations. The economists, however, opine that the benefits were by and large propelled by the need for additional institutional buildings.
Emanuella Enenajor, an economist at the Canadian Imperial Bank of Commerce (CIBC) says that although this encourages fiscal activity, they would least like to witness growth in this area considering the weak growth in the construction of residential buildings.
Recently, Statistics Canada reported that the municipalities have allotted building permits worth $6.5 billion in March - an increase of 8.6% compared to February 2013. According to this federal agency, permit values remained up for the third successive month and it was mainly due to construction of non-residential buildings in Alberta and Ontario.
In fact, the non-residential buildings permit value went up by 19% to reach $2.8 billion - a gain recorded for the second consecutive month. On the other hand, the permit value in the residential sector rose by just 1.7% to reach $3.6 billion following a decline of 8.1% in February. The marginal rise was mainly due to permits for construction of buildings for multi-families.
According to Statistics Canada, the growth notwithstanding, the residential segment is witnessing a sliding trend that began sometime in mid-2012.
Enenajor said that taking into account the developments during the last few months, it is evident that the residential sector still remains somewhat weak. She attributed the trend to a feeble demand in the residential sector following the constrictions imposed by the government regarding rules pertaining to mortgage lending as well as the frustration of the potential home buyers.
The CIBC economist remarked that the industry was witnessing a slowdown in demand, as a section of potential home buyers are being driven out of the real estate market.
As far as the residential sector, including government buildings, educational facilities and medical buildings, is concerned, the permit values have increase over two-fold to reach $980 million in March 2013, subsequent to a 28.1% rise during February this year.
In addition, it may be noted that in all permit values to the tune of $1.4 billion were allocated to the commercial segment - a decline of 9.6% since February 2013.