In a worrying trend for the construction industry, the value of building permits issued in British Columbia plummeted sharply in November 2024, indicating a significant slowdown fueled by soaring costs and diminishing buyer interest. According to Statistics Canada (StatCan), reported on January 10, these permits experienced a staggering 13.4% decline when compared to the previous month.

This stark drop in B.C. stands in contrast to other provinces, with Alberta witnessing a smaller decline of 3.6%, Ontario at 9%, and a national average decrease of 5.9%. The total combined value of building permits in B.C. fell to $1.55 billion in November from $1.79 billion the month before.

A closer look shows that B.C.'s residential sector was the most affected, suffering an alarming 30% decline. Building permit values dropped from $1.25 billion in October to just $868 million in November. On a brighter note, the non-residential sector saw some growth, increasing from $547 million to $686 million, driven primarily by industrial, commercial, and institutional projects.

The plunge in residential permits highlights the struggles faced by multi-unit and condominium developments, particularly in the Vancouver area. A recent report by PricewaterhouseCoopers LLP (PwC) and the Urban Land Institute (ULI) pointed out that the condo market in Vancouver, as well as other cities like Toronto, is hitting a rough patch. Rising construction costs and falling demand have made it increasingly difficult for developers to move forward with new projects.

The report noted a significant slowdown in pre-sale activities, as cost concerns deter investors who typically compose a large segment of new condo buyers. With unsold inventory rising, many investors are finding themselves in a precarious position, often losing money on rental units and struggling to finalize purchases.

Moreover, StatCan’s latest data supports this bleak outlook, revealing that multiple-dwelling building permits saw a massive drop from $1 billion in October to $634 million in November—a shocking 37% reduction. This decline was largely attributed to a decrease in construction intentions within the Vancouver metropolitan area, signaling a deeper crisis in the housing market.

It’s important to note that while these trends can fluctuate, November’s figures for residential and multi-unit permits in B.C. were the lowest recorded in over a year, with the exception of June 2024, following a decision by the Bank of Canada to reduce its policy rate after an initial post-pandemic surge.

As B.C. grapples with these challenges, the future of its construction market hangs in the balance. Will developers find a way to navigate these turbulent waters, or are we witnessing the beginning of a long-term downturn? Stay tuned for more updates on this developing situation!