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Canada building permits soar to record on Toronto, Vancouver condos

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condosCanadian building permits jumped to a surprise record in July, led by Toronto and Vancouver condominiums and apartments, at a time when the central bank says high home prices and indebted consumers remain a key risk to the economy.

The value of municipal permits for multi-unit housing jumped 43.4% to $2.54 billion, Statistics Canada said Monday in Ottawa. Total permits in Toronto rose 29.6% to $1.65 billion while Vancouver surged 46.1% to C$718 million.

Nationwide, permits rose 11.8% to $9.16 billion in July, confounding economists in a Bloomberg survey who forecast a 5% decline. Residential and non-residential permits both reached records, rising 18.0% and 5.2% respectively.

Bank of Canada policy makers said last week that risks posed by “imbalances” in household finances remain, as they kept their key interest rate at 1%. Home sales and prices have shown unexpected strength this year as the lowest mortgage rates in decades spur demand. Policy makers including Finance Minister Joe Oliver have singled out the surge in condominium construction in Toronto and Vancouver for concern.

Municipalities approved 14,050 multi-family housing units in July, a gain of 35.2% from June and 23.8% from a year earlier. The number of units approved for single-family residences fell 0.6% on the month to 6,461 units and rose by 1.3% from 12 months earlier.

“The gain in Toronto was driven by higher construction intentions for multi-family dwellings and, to a lesser extent, institutional buildings,” Statistics Canada said Monday. “The increase in Vancouver came mainly from multi-family dwellings.”

The gain in non-residential activity was led by government spending, rather than the business investment Bank of Canada Governor Stephen Poloz said is needed to bring about a sustainable recovery. Institutional spending rose 28.4%, while commercial projects rose 2.6% and industrial buildings dropped by 32.6%.

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