Contractors await boost from government spending

British Columbia saw the value of residential building permits tick up a bit in January from December, though overall, permits continued their slide from historic highs.

Statistics Canada reported Thursday that builders took out $191.6 million in permits for new-home construction in January, compared with $187 million in December.

However, the total value of permits taken out in January, $345.4 million, slipped three per cent from December. And total January permits were down 57 per cent from the $815.3 million worth of permits taken out in the same month a year ago.

Year over year, residential permits in January were down 70 per cent from the $653 million taken out in the same month a year ago.

Philip Hochstein, president of the Independent Contractors and Business Association of B.C., called the construction slowdown an inevitable consequence of the world's economic trouble, but one that took hold much more rapidly than expected.

"What really shocked the industry was, it was almost like switching a light off," Hochstein said. "In October, projects just stopped" as the world's financial markets collapsed and lending credit dried up.

Keith Sashaw, president of the Vancouver Regional Construction Association, said it was the second week in October when his organization's members started seeing customers put projects back on the shelf, more for lack of financing than to cancel projects that were no longer viable.

"It really was quite breathtaking," Sashaw said, "just the speed with which everything froze."

Sashaw said he expects some further declines in building levels over the coming months, but not as dramatic as the drop from October.

Hochstein added that residential builders are putting projects on hold because of uncertainty around their potential sales. Real estate sales declined through 2008, with the most dramatic drop occurring during the fall.

"Developers are not building for today," Hochstein said. "They're building for two years from now," and they won't start building again until they see the prospect of increasing sales.

Hochstein added that the industry is anxiously waiting for the provincial and federal governments to start putting planned infrastructure projects, designed to stimulate the economy, out to tender.

"But it's a great time to build," he said. "The industry has not been this competitive in years. We have the capacity, we have the skilled manpower and we're far more productive."

Across Canada, builders took out $4.4 billion worth of permits, a 4.6-per-cent decline from December, driven by a significant drop in residential building activity.

Nationally, residential builders took out $2.2 billion in permits, down almost 18 per cent from December compared with non-residential permits of $2.3 billion, which was up 12.2 per cent.

Statistics Canada said the value of building intentions fell in every province except Ontario, Saskatchewan and Prince Edward Island.

(prepared by Derrick Penner/Vancouver Sun)