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Vancouver Island construction industry hit hard by pandemic

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Building permits by type, Vancouver Island-coast

Victoria, B.C. — The construction industry in the Vancouver Island area has been hit hard in the second quarter of 2020 due to the COVID-19 pandemic. In a normal year, building permits are usually on the rise in the second quarter of the year on the seasonal increase in residential activity but total building permits issued Island-wide have decreased 14 per cent to $506.6 million compared to the first quarter, reports Vancouver Island Construction Association.

Residential permits stayed the same as the first quarter, but non-residential permits were down 54 per cent. This decrease was across all categories (ICI), with the largest decline in institutional government permits (down 72 per cent) followed by commercial permits (down 37 per cent).

Investment spending on non-residential building construction in the Victorian metropolitan area decreased by nearly five per cent in May from the prior month, continuing a declining trend. Victoria’s residential building construction investment spending surged in May to $163.49 million following a pandemic-related contraction in April. Building construction cost increases were higher in residential than in the non-residential sector.

The construction industry employment saw a decline across the island, with the largest decreases outside the Victoria metro area. The pandemic and the predicted second wave will play an important role in the region’s economy and construction industry.

There was a sharp drop in February follows by slowly improving permit activity. June saw a surge due to the accumulated demand backlog.

Total building permits rose 31 per cent in the Alberni-Clayoquot regional district from quarter one to quarter two. The Capital regional district saw a drop of 27 per cent in the second quarter for building permits. However, permit activity was slightly higher compared to the same quarter in 2019.

Total investment spending decreased in non-residential building construction investment for the Victoria CMA. It decreased 4.8 per cent during May from the prior month due mainly to an 8.2 per cent decline in commercial buildings. Compared to the first five months of last year, total spending was 18.9 per cent lower while institutional and government activity was down 45.4 per cent.

Total residential investment spending rebounded strongly during May over the prior month’s COID-19 contraction. Spending on single-family dwellings saw the larger rebound in May following April’s sharp and sudden plunge.

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