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Construction costs slow for Q3 compared to previous quarters

November 3, 2022  By Staff


Residential building construction costs increased 2.5 per cent and non-residential building construction costs rose 2.1 per cent in the third quarter, according to the latest numbers from StatsCan.

The growth was slower than the second quarter, where residential construction costs grew 5.3 per cent and non-residential costs were up four per cent. The rate of growth for both residential and non-residential building construction costs has notably slowed when compared to the past year and a half.

Contractors surveyed attributed part of the growth in building construction costs to skilled labour shortages and high labour costs. Despite a decline in number of vacancies for construction jobs from April to July, the vacancy rate remains high, which has kept upward pressure on wages in the industry.

Labour contract renegotiations also contributed to higher labour costs in the third quarter.

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Additionally, higher material costs, amid a limited availability of materials and equipment, particularly concrete, steel, glass and piping, contributed to higher costs. Contractors also noted that fuel prices continue to add upward pressure on construction costs.

Chart 1 Chart 1: Building construction price indexes, quarterly change
Building construction price indexes, quarterly change

Chart 1: Building construction price indexes, quarterly change

Labour and material shortages continue to push up non-residential construction costs

Non-residential building construction costs grew at a slower pace during the third quarter, following a peak in the previous quarter. This deceleration was recorded in every CMA, except in St. John’s.

Cost increases in non-residential building construction remained largely driven by price growth in cement and concrete. Higher prices for cement, concrete, and other materials are linked to continued robust demand for construction materials alongside supply challenges due to labour shortages, as well as temporary shutdowns at major plants early in the summer.

Non-residential building construction costs rose the most in Toronto (+2.6%), followed by St. John’s (+2.3%). St. John’s was the only CMA that recorded higher construction costs in the third quarter relative to the second quarter.

Saskatoon (+1.0%) experienced the smallest quarterly price increase, followed by Halifax (+1.3%) and Calgary (+1.4%).

By building type, the largest increases to construction costs were measured in factories (+2.3%) and office buildings (+2.1%) in the 11-city composite.

Year-over-year growth in construction costs lower than previous highs

Building construction costs for residential construction in the 11-city composite rose 18.7% year over year in the third quarter, moderating from highs registered over the past year. Toronto (+25.9%) and Edmonton (+19.5%) recorded the highest growths and drove up the composite.

Non-residential construction building costs rose 12.5% year over year in the third quarter, also moderating from the previous quarters of 2022. Construction cost increases were the largest in Toronto (+15.6%), Montréal (+13.0%) and Ottawa (+12.6%).


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