Canada’s building permits increase, driven by major hospital project in Ontario

    by VT Markets
    /
    Jul 11, 2025
    In May, Canadian building permits increased by 12.0%, which was surprising since experts expected a decline of 0.8%. The previous month’s permits were revised to show a slightly worse decrease of 6.8%, instead of the initial 6.6%. Non-residential building permits grew by $1.2 billion, reaching a total of $5.6 billion in May. This growth was primarily driven by Ontario’s institutional sector, which saw a $1.3 billion increase. A major hospital permit in the Niagara area contributed significantly, being valued at nearly seven times the average major institutional permit. This pushed the national institutional total to a record high of $2.5 billion. Residential construction intentions also rose by $169.8 million, bringing the total to $7.5 billion in May. Most of this increase came from British Columbia’s multi-family sector, where permits went up by $687.7 million to $1.5 billion. Although the data looks strong, it is heavily influenced by that specific hospital permit. The prior section highlights that total Canadian building permits unexpectedly rose in May by 12.0%, which was against analysts’ expectations of a slight decline. Revised figures from April showed a slightly larger drop than previously reported. The crucial point isn’t just the overall increase, but what is driving it. Most of the May surge in non-residential permits came from a single massive development in Ontario — the hospital project in Niagara. This significantly inflated the monthly data. Without this permit, the overall numbers would have been much more modest. The unusually large value of this permit suggests the non-residential sector seems more active than it is in reality. Institutional permits hit a national high, but mainly because of this one substantial item. On the other hand, residential intentions rose, especially in British Columbia. Notably, most of the growth was in the multi-family sector — apartments, condos, and similar types. Over two-thirds of this increase came from that province, indicating a regional, rather than a nationwide, boost. For those analyzing market trends, this data implies that the headline figures don’t reflect a genuine shift in the underlying construction strength. The presence of such a large, one-time permit indicates we aren’t witnessing organic growth typically required for trend-following. A single big push can lead to misleading headline figures. We generally interpret this data with caution, as price-sensitive areas are more likely to face reversals when influenced by one event. Relying too much on these headline numbers, without adjusting for their composition, risks being caught off guard when the temporary boost subsides. The activity in British Columbia’s multi-family sector may signal early signs of investment shifts, probably due to changing population patterns and provincial policies. However, regional strength by itself doesn’t ensure the reliability needed for mid-term investments in interest-sensitive assets. Structurally, we see this data point more as an outlier than a turning point. It highlights why price reactions shouldn’t always reflect data size. When underlying spreads fluctuate based on such unusual data, we remain cautious of sustained trends—especially if participation outside the institutional sector is limited. In summary, while the totals appear strong, their distribution suggests a need for caution. We are looking for signs of adjustment in upcoming numbers and expect some normalization once the impact of major projects diminishes. Real direction will depend less on these quarterly spikes and more on consistent performance across various regions and property types.

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