Construction activity on Vancouver Island is showing strong gains except for a slight dip in the Nanaimo market.
Greg Banyton, CEO of the Vancouver Island Construction Association, says building permits have increased a healthy 10.1% during the second quarter compared to the first quarter.
The first half of 2015 saw residential building permits grow 12.9 per cent compared to January-June 2014.
Banyton says in the Nanaimo area it was down 4% and non-residential permits were down 41%. However he cautions it could be due to a blip in the market between permit approvals and applications.
“It sounds like a bleak picture but it’s actually not,” says Banyton.
He says residential permits are up 20% across the island and non-residential permits are up 25%.
All but one Vancouver Island district (Comox Valley Regional District) saw more permits issued in the second quarter than the first quarter.
“On the government side, the province has been holding back restraining funding to balance the budget,” says Banyton. “Commercially the numbers are down because they’ve been compared with high numbers in previous years. On the industrial side we’ve been weak. It’s down a little bit.”
Construction employment rose a modest 1.5 per cent in the second quarter but it rose an even greater 16.8 per cent over the 2014 year to date.
Non-residential building construction cost increases remained modest for the remainder of the year. However less modest increases are anticipated as labour market participation decreases and demand increases. Pressures on the labour market and construction costs are expected to intensify next year and are projected to continue through to 2018, and potentially beyond.
The third quarter of 2015 will likely bring a seasonal increase in residential construction activity. Non-residential permits will likely remain low.
“Our members are reporting they’re busy,” says Banyton. “Typically where they’ve had 5 or 6 bids in the past, there’s only two now.
He says the construction association has 500 members on Vancouver Island and sees more construction activity occurring for the remainder of the year and into next year.
”We’re optimistic. The forecast for the numbers are that there’s going to be really strong economic activity,” he says.
Equity markets are expected to rebound, interest rates will likely remain low longer, and the Canadian dollar will decline more than previously expected. These factors will likely be positive for the construction sector next year. The Island economy will benefit from improving U.S. economic conditions, and low interest rates in Canada. This will set the stage for higher spending on residential construction and in the long term, private non-residential building