OTTAWA – Canadian building permits edged downward in April on weak demand to build single-family homes and condominium units in Toronto, where elevated house-price gains forced lawmakers to introduce a fresh round of measures to deter real estate speculation.
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The total value of building permits issued by Canadian municipalities fell 0.2% to 7.06 billion Canadian dollars ($5.24 billion) in April, Statistics Canada said Wednesday. Expectations were for a 3% rise, according to economists at Royal Bank of Canada.
The previous month's building-permits data were revised higher, and now suggest permits decreased 4.9% versus the earlier estimate of a 5.8% decline.
Building permits are meant to provide an early indication of construction activity in Canada and are based on a survey of 2,400 municipalities, representing 95% of the country's population. A permit gives a contractor the right to build but doesn't necessarily suggest construction has commenced.
On a year-over-year basis, permits issued fell 3.3%. Building-permit data tend to be volatile on a month-over-month basis.
Of particular note in the building-permits report was data for Toronto, which has been the prime of concern of policy makers in terms of frothy real-estate markets. The data agency said the Toronto market in April recorded the lowest level of single-family construction intentions and the lowest number of new single-family dwelling units approved since January 2016.
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The provincial government of Ontario introduced roughly a dozen measures in April aiming to end housing speculation and curb house-price gains of 30% on a one-year basis. Chief among them was a 15% tax on foreign buyers of residential real estate in the greater Toronto region.
The Bank of Canada had warned price gains in Toronto weren't sustainable, based on economic fundamentals.
Overall, the value of building permits -- residential and nonresidential -- issued in Toronto fell 13.5% on a month-over-month basis, and a whopping 50.4% in the nearby city of Hamilton, Ontario.
For the country as a whole, the value of residential permits fell 2.5% in April to C$4.47 billion, while nonresidential permits rose 4.1% to C$2.58 billion.
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(END) Dow Jones Newswires
June 07, 2017 09:39 ET (13:39 GMT)