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Canada Residential Construction Spending Up 8.5% in 2007
March 3, 2008
The total value of residential construction investment in Canada for 2007 reached $88.7 billion, an increase of 8.5% compared with 2006. All components of residential construction (new housing, renovation and acquisition costs) and all provinces and territories saw gains.
In constant dollars, the increase in the overall residential construction investments in 2007 was 2.3%.
Among provinces, the biggest increases (in dollars) occurred in Alberta (+18.9% to $14.8 billion) and in Quebec (+8.0% to $19.1 billion). In percentage terms, Saskatchewan led the rest with an increase of 37.5%.
New housing investment represented the largest contribution in dollars, posting an increase of 8.5% to $44.2 billion. This increase stemmed mainly from investments in single-family homes, which rose 7.2% to $27.4 billion, and in apartment and condominium construction, which increased 9.7% to $10.3 billion.
The favorable job situation, growth in disposable income, attractive financing options and strength of the economy in Western Canada continued to support the demand for housing. The rise in the price of houses also played an important role in the increase in investments. The New Housing Price Index (house-only component) increased by 7.4% in 2007 compared with the previous year.
In 2007, construction spending in constant dollars fell 2.2% for new single-family housing and remained unchanged for apartments and condominiums.
In 2007, renovations increased 9.5% to $36.8 billion, which represented 41.5% of all residential construction investments. Acquisition costs represented 8.6% of total investments, or $7.7 billion, up 4.1% compared with 2006.
For the fourth quarter of 2007, construction investment increased 10.6% compared with the same quarter in 2006 to $23.1 billion. The increase came from new housing, renovations and acquisition costs.
Spending on new housing construction reached $11.9 billion, up 12.4% compared with the same quarter in 2006. This increase stemmed mainly from investments in new single-family housing construction, which came to $7.3 billion, an increase of 10.5% compared with the fourth quarter of 2006. Apartment construction rose 14.0% to $2.9 billion.
The increase in new housing investment was largely attributable to the increase in the average cost of new units. In constant dollars, spending on new single-family housing and apartment or condominium construction were up 4.2% and 4.4% respectively compared to the fourth quarter of 2006.
Renovation spending grew 8.3% compared with the fourth quarter of 2006 to $9.2 billion. Acquisition costs rose 10.3% to $2.0 billion.
Gains were achieved in all provinces and territories with the exception of Quebec and the Yukon. The biggest increase (in dollars) was in Alberta (+19.9% to $4.1 billion), largely due to the increased spending on new housing construction.
British Columbia came next with a 19.8% increase in investment to $3.9 billion. Ontario also had a strong 6.4% increase to $8.4 billion. Renovations in Quebec fell 4.7%, which contributed to a slight decrease in total investment for the province.