Why building permit values are down dramatically in Kelowna
Building permit values in Kelowna have gone down dramatically since last year, but that’s in part because of only a handful of major projects last year.
Last year, Kelowna broke its record for the value of building permits issued in the city with $1.8 billion.
In September 2023, there were $279 million worth of building permits issued, this year that number is down by roughly 84 per cent to $45 million. Kelowna saw the biggest drop in building permit value in the country, according to Statistics Canada.
Since Kelowna is the biggest city in the Central Okanagan its building permit values affect the entire region’s numbers. The Regional District of Central Okanagan reported a 52 per cent decrease in permit values this year compared to last year.
The numbers are negative, but Kelowna’s director of planning Ryan Smith said they aren’t a cause for concern.
“One project of about $100 million can really skew our numbers,” he said. “Someone asked me yesterday if there's a reason for concern or panic, and I don't think that that's the case... we should be expecting the cyclic nature of this industry. And there are things beyond the city's control that cause these ups and downs.”
A large portion of last year’s building permit value was created by a few major developments like Mission Group’s $140 million permit for its Aqua project.
Last year, UBC Okanagan also got a $262 million permit for its downtown tower which is now the subject of several lawsuits since its construction ousted people from their homes in a neighbouring building.
READ MORE: ‘I just want to move on’: Evacuated resident can’t escape UBCO tower debacle
Smith said comparing building permit values month to month, or even year to year, is an imperfect measurement.
Building permit values are helpful data to look at when it comes to a city’s growth and housing market, but Smith said there are other numbers to take into consideration before you can see the full picture.
“The Canada Mortgage and Housing Corporation’s purpose-built rental vacancy rate, which they'll release in the end of January, early February, would be a good indicator to say, over the last few years have we approved enough new rental housing, and has it has enough been built to start to push the vacancy rate up in Kelowna,” he said.
Smith said the goal is to have a rental vacancy rate between three and five per cent. For the last few years the rate has been below three per cent, but Smith is optimistic that Kelowna’s rental vacancy rate will be above three per cent this year.
The regional district’s report also showed that housing starts are still on the rise. Housing starts are up 72 per cent this year compared to last, and multi-family buildings are up 89 per cent.
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