By Anthony Capkun
May 6, 2021 – Statscan reports that prices for residential building construction increased 5.6% in the first quarter of 2021—“the largest increase since the data series began in 2017”.
Non-residential building construction prices rose 1.5%, led mostly by higher construction costs for factories and warehouses.
Construction costs rise during the first quarter
Construction costs were up for every building type in the first quarter, ranging from a 1.2% increase for office buildings to a 6.9% gain for townhouses, followed closely by single-detached houses (+6.8%).
Higher construction costs overall were mostly attributable to a shortage of construction materials, notes Statscan, which led to higher month-over-month prices for softwood lumber (+11.9%) and veneer and plywood (+20.1%) in March.
Softwood lumber (+118.9%) prices rose at their fastest year-over-year pace on record in March, partially because of low stocks following the temporary shutdown of sawmills during the first wave of the pandemic. The demand for materials continued to be high as building materials and supplies sold by wholesalers were up 19.1% year over year in February.
The surge in residential construction costs was also spurred by historically low interest rates and a desire for more living space during the pandemic, Statscan suggests.
Investment in residential construction continued to rise, mostly driven by the growth of single-family home construction. Investments in this sector have been reaching consecutive record levels since September 2020, and stood at a new high of $12.3 billion in February.
Non-residential building construction costs rose at the fastest pace for factories (+2.1%) and warehouses (+1.8%) in the first quarter. Warehouse space is at a premium in the wake of retail e-commerce sales increasing 92% year-over-year in February, following a 116.8% surge in January.
Non-residential building costs were up in every city covered by the survey.
Costs increases in Calgary, Toronto and Ottawa
Residential building (+11.7%) construction costs rose at a record year-over-year pace in Q1, mostly because of limited supply and increased demand for building materials.
Construction costs for a single-detached house accelerated from a 4.4% year-over-year increase in Q3 2020 to a 14.6% rise in Q1 2021.
Residential building construction costs rose at the fastest pace in Calgary (+16.8%), Toronto (+15%) and Ottawa (+14.6%) in the first quarter.
Non-residential building construction costs rose 2.1% year-over-year, led by Ottawa (+4.9%) and Montreal (+4.4%), mostly because of factories.