Construction investment is expected to grow by 15.1% to $2.4
billion in 2003 primarily due to major projects in the resource
sector. This is consistent with expectations in the March
forecast. Industry employment is expected to exceed 10,000 once
again in 2003. After hitting an all-time low of 8,900 in 1997,
following completion of Hibernia related construction, annual
average employment in the construction industry has exceeded
10,000 every year since 1998. |
Non-Residential
|
Spending on non-residential construction in 2003 is expected
to be $1.72 billion, 24.0% higher than in 2002. Most of the
increase is resulting from construction activity associated
with the Voisey's Bay mining project and the White Rose
offshore oil development. Construction on both of these
projects is currently in full swing with substantial
construction expenditures associated with each project.
Outside of the mining and oil and gas sectors, significant
investment is occurring on a variety of other projects in the
province. Construction on "The Rooms"—the
provincial archives, museum, and art gallery—is continuing
in 2003. Other ongoing projects include the construction of a
butane storage facility at the North Atlantic Refinery in
Come-By-Chance and the construction of a primary sewage
treatment plant that will service St. John's, Mount Pearl and
a portion of Paradise.
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Residential
|
Over $705 million is expected to be spent on
residential investment this year, down slightly from $720
million recorded in 2002. In real terms, spending is
approaching the record-high values recorded in the late 1980s
and early 1990s.
|
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Residential expenditures encompass
renovations and repairs to existing homes and new housing
construction. Renovations and repairs have
been gradually comprising a larger share of total
residential investment, increasing from 60% in the early
1990s to 65-70% today. This increase is a result of
several factors including aging of the existing housing
stock (about 43% of the province's housing stock was
built prior to 1970); four years of record sales of
existing homes; low interest rates and more flexible
credit terms; and employment and income growth.
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| Housing Starts
|
|
 |
| Statistics Canada; Department of Finance |
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The remaining 30-35% of
residential investment is associated with new housing
construction. Housing starts are forecast to increase by
3.4% in 2003 to 2,501 units, stronger than anticipated
in March when starts were forecast to be unchanged. Like
2002, the housing market in 2003 is being driven by low
mortgage rates, income growth, and increased consumer
confidence. While 2003 housing starts are the highest
since 1991, they are still relatively low compared to
the historical peak of 5,709 in 1976, when significant
government sponsored social housing development and
favourable demographics produced very high levels of new
home construction.
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