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Nanaimo sees its worst building permit slump in more than a decade

Nanaimo saw its worst building permit slump in more than a decade thanks to a slowdown in the residential construction market.

While the Harbour City saw an uptick in building permits for major commercial projects in 2013, applications for single family homes dropped 14 per cent from the previous year.

The slip contributed to an overall tally of 919 permits last year, the lowest number seen since 2001 when the total hit 871. Construction value was also down 26 per cent, leading to thousands less in revenue than the city anticipated.

Dale Lindsay, the municipality’s director of community development, said the city budgeted for $1.6 million in revenue this year because of an increase in permit fees, but generated fewer dollars thanks to a drop in applications. The city generated $1.2 million in 2013, down from $1.3 the previous year. City officials hope to make up the shortfall with surplus from other areas of the budget.

According to Lindsay, the decrease can be laid at the door of the broader economy and issues ranging from consumer confidence to interest rates and housing supply. But the slowdown in the residential market was the primary reason behind this year’s permit numbers, he said.

“[We had a] relatively strong and stable commercial market in Nanaimo, but a drop off in residential there is no doubt.

“Our strongest quarter was at the end of the year, the fourth quarter, and by all accounts it looks like it will carry forward to 2014 ... we’ve got some very large projects that will push that construction value up,” he said, listing projects like the conference centre hotel and B.C. Hydro substation.

The city’s building permits generate millions in general revenue each year and represents 70 per cent of the building inspection department budget, but it also indicates trends in the construction market.

Last year, the city saw a drop in commercial construction value from $46.3 million in 2012 to $37 million, but permit numbers were the highest since 2010.

Major builds were launched, from the $8-million Canadian Tire store to the $3.3-million Port Place addition, helping to buoy application numbers hit hardest by the residential housing market.

According to Carol Frketich, B.C. regional economist for the Canadian Mortgage and Housing Corporation, Nanaimo may have seen a drop in building permits – and actual construction start ups – as  builders adjusted  activity to reflect market conditions  and the shift toward resale.

“Nanaimo had a well-supplied resale market in 2013, so potential homebuyers, rather than looking to new housing, could perhaps find what they need in the resale market,” she said.

Building permits for single-family homes dropped to 169 from 197 the year previous. Actual start ups for single detached homes over the first 11 months of the year had similar statistics, tumbling from 229 in 2012 to 189. There was a 37-per cent drop in construction starts overall, with the largest swing happening among multi-family builds which went from 376 starts in 2012 to 194.

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