Waterloo Region is making headlines with its booming construction sector as it witnessed a near-record year for new building permits in 2022. The total value of these permits amounted to nearly $1.8 billion, reflecting the region’s strong and thriving economy. This surge in building permits is not only an indicator of the region’s continued growth but also a testament to its vibrant industries, local talent, and world-class post-secondary institutions.
Meanwhile, central banks globally have been increasing interest rates to assess economic momentum and inflation effects. However, the Bank of Canada (BoC) broke the trend by pausing interest rate hikes in March and April, with the key rate settling at 4.5%. This decision was influenced by a decrease in Canada’s inflation rate to 4.3% in March, down from 5.2% in February, and an expected further decline to 3% by mid-year.
Maintaining a reasonable interest rate spread between Canada and the U.S. (with a benchmark rate of 5.25%) is favorable, as a significant difference can weaken the Canadian dollar, reduce global purchasing power, and potentially lead to increased inflation.
Residential and Non-Residential Growth:
In 2022, the combined total of residential and non-residential projects exceeded the ten-year average by a significant 33%. Non-residential construction particularly experienced a substantial increase, contributing to the region’s overall growth. With over $1.1 billion in permits issued for new residential construction, Waterloo Region welcomed 4,662 new residential units. While these figures were slightly lower than in the previous year, they still surpassed the ten-year average. The majority of new units added were apartments and townhouses, with a quarter strategically located along the region’s central transit corridor.
Accommodating Growth and Strategic Planning: Waterloo Region’s rapid expansion has necessitated proactive planning and strategic investments to accommodate future commercial and residential growth. Recognizing this, Karen Redman, the Regional Chair, emphasizes the importance of working with partners to ensure the region continues to develop and meet the needs of its growing population. In August, an Official Plan amendment was adopted, approving the addition of 121,000 new housing units in the region. This amendment aims to promote the development of a diverse range of housing options and the creation of 15-minute communities, supporting sustainable growth.
The issuance of building permits across the region surpassed the potential growth projections outlined in the Regional Official Plan. This reflects the region’s attractiveness for housing and employment opportunities. Waterloo Region’s vibrant economy, combined with its reputation as one of the fastest-growing communities in Canada, has played a significant role in surpassing expectations. The region’s commitment to strategic planning and investment ensures a well-prepared foundation for continued growth.
Currently, economic signals suggest that the Bank of Canada is moving towards achieving economic moderation without a recession. This rate hold could potentially result in downward pressure on lending rates in the coming months. The next Bank of Canada announcement is scheduled for June 7th, and further updates will be provided.
What Does it all Mean?
Waterloo Region’s near-record year for building permits in 2022 highlights its economic strength and potential. With a focus on both residential and non-residential construction, the region has proven its ability to accommodate growth while maintaining a diverse range of housing options. As the region continues to expand, strategic planning and investments will play a crucial role in shaping its future. With a proactive approach and commitment to sustainable development, Waterloo Region is poised for continued success as a vibrant and thriving community.