Construction

In Canada’s urban areas, construction is a feature of daily life as cities continue to grow and expand. Houses, office buildings, hospitals and schools make up the majority of this construction.

The sounds of construction were particularly loud in 2004, when the total value of all building permits issued reached a record $55.6 billion—roughly 5.8% of Canada’s gross domestic product (GDP). The majority of permits were issued for residential construction. In 2004, building permits attained their highest value since 1987.

Building permits are an early indicator of construction activity, since they measure construction intentions for the near future. Building permits and housing starts are not always equal, however, because construction may start immediately or not at all after a permit is issued.

Feeding the demand for new homes

Low mortgage rates, accelerated income growth, high consumer confidence, a secure job market and falling vacancy rates in Canada’s urban centres have all contributed to a large increase in the demand for new houses. This increase in demand, coupled with higher costs for materials and labour, has led to the rising value of permits issued and to rising prices for new homes across Canada.

Most residential permits in 2004 were issued for single-family homes. However, permits for both single- and multi-family homes made strong gains. The number of multi-family homes, such as condos, apartment buildings and semi-detached homes, is growing at a much faster rate than single-family homes.

Houses are also becoming larger. In 2001, the average home had 6.3 rooms, excluding bathrooms, hallways and rooms used for home business, which is up from 5.3 rooms in 1961. Interestingly, this trend toward larger homes has coincided with a drop in the average household size, from 3.9 people per house in 1961 to 2.6 people in 2001.

The record value for residential permits in 2004 followed a decade of growth in residential housing across the country. Over the decade, the value of permits increased in all but 3 of 25 census metropolitan areas (CMAs).

In 2004, Ontario authorized the most dwellings—a total of 89,000 permits valued at $13.9 billion. Toronto represented just under one-half of those permits—43,000 dwellings valued at $7.2 billion. The city is a magnet for immigrants and jobs, which stimulates demand for housing.

Alberta, on the other hand, had the highest growth rate in the number of dwellings authorized from 1994 to 2004. The number of residential building permits grew 116%, from 18,000 in 1994 to just under 39,000 in 2004. This growth was spurred largely by home building in Calgary and Edmonton and by the oil and gas industry boom that has drawn more people to the province.

Non-residential construction also strong

Commercial buildings, such as offices and hotels, have also been in high demand. In 2004, the value of commercial construction permits reached $10.1 billion, more than double their value in 1994.

The demand for industrial and institutional building permits grew more slowly. The value of industrial permits grew 54% from 1994 to 2004 to reach $3.5 billion, while institutional permits increased 83% to $5.1 billion. In 2004, however, institutional permits dropped 12% and industrial permits fell 4%.

Permits for non-residential construction fell slightly in 2004 from a peak of $18.8 billion in 2003. Ontario took in $8.7 billion for non-residential permits in 2004, the highest value of all provinces. Alberta had the highest increase in the value of permits: from 1994 to 2004, their value grew 2.5 times to $2.5 billion.

Employment in construction is booming

The construction industry relies on skilled trades people to wire buildings, hang drywall, lay brick and operate backhoes. After a slight decline in the 1990s, construction employment grew at an annual rate of 4.5% from 2000 to 2004. From 2003 to 2004 alone, the number of people employed rose by 45,000 to total 953,000.

The construction sector is dominated by a large number of small firms. Over one-half of all construction employment comes from businesses with 20 employees or fewer and one in three of all construction workers was self-employed in 2004.

The number of jobs in the construction industry in Alberta has almost doubled in the past 10 years, reaching 161,000 in 2004. Ontario still has the largest share of construction employment, and is home to over one-third of Canada’s construction workers.

The average hourly wage for construction workers in 2004 was $19.53. While still slightly below the $19.72 average wage for the goods-producing sector as a whole, construction wages have been increasing steadily, rising 18% since 1997.

The demand for labour in 2004 sent the construction unemployment rate down to 8.6%—a 30-year low. The demand also meant that workers aged 55 to 69 were more likely to remain in the workplace than in the 1990s. However, this has not been at the expense of younger workers, as they are also being hired to rejuvenate the work force.

Housing conditions improved considerably in Canada's 27 largest urban areas during the late 1990s after deteriorating earlier in the decade. But despite this improvement, one out of every six households in metropolitan areas lived below one or more housing standards in 2001, and was considered to be in "core housing need."

Housing conditions are assessed using three standards: whether the dwelling needs major repairs; whether it has enough bedrooms for the size and composition of household's members; and whether housing costs 30% or more of the households total before-tax income.