The Canadian real estate market saw a record surge in building permits in 2024, with the total value rising 7.8% to $145.3 billion, marking the highest level since 2017, Statistics Canada reported.

In December alone, building permits jumped 11% to $13.1 billion, primarily driven by a 21.2% increase in residential-sector intentions, with multi-residential projects leading the way. Ontario and B.C. led the gains in multi-family construction, pushing the total residential permit value to $9 billion. Multi-unit housing permits surged 33.3% in December, while single-family home permits edged up by 1.8%.

Meanwhile, non-residential building permits declined for the third consecutive month, falling 5.9% to $4.2 billion. The decrease was largely due to declines in the commercial and institutional sectors, with Quebec experiencing the largest drop. In contrast, Ontario saw an increase in non-residential permit values, primarily driven by growth in the industrial sector.

Building permits usually signal future development activity. But they might not do so in 2025 following recent pessimistic outlooks due to concerns about looming high U.S. tariffs on imports from Canada.

Despite the rise in permits, housing starts fell by 13% in December to an annualized rate of 231,468 units, according to the Canada Mortgage and Housing Corporation (CMHC). Over the year, housing starts increased by 2%, bolstered by record-high rental construction levels and growth in Alberta, Quebec, and the Atlantic provinces. However, CMHC warned that Canada remains unlikely to meet the national housing agency’s 2030 affordability target, as a projected slowdown in condominium apartment construction through 2027 could further constrain supply.

The fourth quarter of 2024 marked the fourth consecutive quarterly increase in total building permits as their value rose 1.2% to $37.5 billion, said StatCan. Residential construction intentions led this growth, with multi-family permits accounting for 70.1% of the sector’s gains. Conversely, the non-residential sector retreated after reaching a record high in the third quarter, with Ontario leading the decline.

For the full year, the residential sector recorded a 6.3% increase in permit values, reaching $52.5 billion. However, single-family construction intentions dropped significantly, falling 30.9% from their 2017-2022 average. In contrast, multi-family construction permits climbed 12.2% to $34.1 billion, nearly reaching record levels.

The non-residential sector continued its upward trend for the fourth straight year, rising 0.2% to $36.6 billion in 2024. Growth was led by Ontario, where industrial construction permits hit a series high, driven by manufacturing and electric-vehicle battery plant projects in St. Thomas and Windsor, Ontario, as well as Bécancour, Quebec.

Despite the boom in permit activity, the construction industry faces potential headwinds, including the looming trade dispute with the United States. Proposed U.S. tariffs on Canadian exports have prompted the federal government to announce since paused countermeasures, raising concerns over potential cost increases in building materials.

Kevin Lee, CEO of the Canadian Home Builders Association told Canadian Mortgage Professional that, if they are introduced, the proposed tariffs would make the outlook for housing starts even murkier.

“There’s so much uncertainty around all of them,” he told CMP. “But we’re looking at a slower [pace] in the year ahead anyway, without the tariffs.

“So, we would expect it to slow down still more if the tariffs and the countervailing tariffs come into play.”

The timeline for lifting the pause on retaliatory action hinges on when the U.S. implements its tariffs.

Pictured: New Cressy multi-family real estate project in Vancouver, delivered in 2024.

Image: CBRE/Cressy