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Canada Residential Investment Up 7.5% in 1Q
June 2, 2008
Source: Statistics Canada
The total value of residential construction investment in Canada reached $19.8 billion in the first quarter of 2008, an increase of 7.5% compared with the first quarter of 2007. Increases seen in most provinces and for the three components of residential construction (new housing construction, renovations and acquisition costs) explained this quarterly increase.
The favorable job situation, growth in disposable income, flexible financing options and the strength of the economy in Western Canada continued to support the demand for housing. The increase in investments depends upon the rise in the price of houses. The New Housing Price Index (house-only component) increased by 6.0% in the first quarter of 2008 compared with the same quarter in 2007.
New housing investment increased by 8.8% compared with the first quarter of 2007 to $9.7 billion. Investment in apartment and condominium construction contributed the most (in dollars) to the increase in this component. Spending on apartments increased by 17.5% to $2.6 billion. Construction spending on single-family housing rose by 3.7% to $5.6 billion. The increase for single-family housing stemmed exclusively from prices, whereas the one for apartments was mainly linked to new construction starts.
In constant dollars, investment in new apartments and condominiums increased 6.4%, while spending on the construction of new single-family homes dropped 1.1%.
Renovation spending came to $8.4 billion, a 7.2% increase compared with the first quarter of 2007. Renovation spending represented 42.4% of total residential construction investments. Acquisition costs rose 1.3% to $1.7 billion.
The biggest increases (in dollars) in residential investment occurred in British Columbia (+21.2% to $4.0 billion), Alberta (+9.1% to $3.5 billion) and Ontario (+4.0% to $6.9 billion). Quebec, Prince Edward Island and the three territories reported decreases.