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Canada: Residential building construction costs increased 1.0% in the fourth quarter

[Feb 10, 2023]

According the latest reports from Statistics Canada, Residential building construction costs increased 1.0% in the fourth quarter, following a 2.5% increase in the previous quarter. Non-residential building construction costs rose 1.6% in the fourth quarter, following a 2.1% increase in the previous quarter.

Skilled labour shortages and cost of materials, particularly fuel, concrete and steel, were reported by contractors as key issues across the construction industry. For non-residential construction, availability of materials was also reported as a key issue.
Rising concrete costs contribute to higher residential construction costs
Residential building construction costs in the fourth quarter were driven by cost increases in equipment (+2.6%), metal fabrications (+2.4%), and concrete (+2.2%). Costs in the wood, plastics and composites division (+0.5%) grew at a slower rate compared with previous highs, which can be attributed to the continued decline in lumber prices.

In the 11-census metropolitan area (CMA) composite, the cost to build high-rise apartments (+1.7%) grew the most of all residential buildings in scope for the survey, followed by low-rise apartments (+1.0%).

Costs to construct residential buildings increased the most in Vancouver (+1.6%), followed by St. John's (+1.4%) and Winnipeg (+1.3%). Most CMAs covered by the survey recorded their lowest quarterly increases of the year in the fourth quarter.

Higher costs for steel and concrete led non-residential construction price growth
Non-residential building construction cost growth was led by cost increases in structural steel framing (+2.5%), followed by concrete and metal fabrications (both up by 2.3%). Of all non-residential buildings surveyed, the cost to build bus depots with maintenance and repair facilities and factories (both up by 1.9%) rose the most in the 11-CMA composite.

While growth in non-residential building construction costs across most CMAs slowed in the fourth quarter, Moncton (+3.6%) was the only CMA to record its largest quarterly price increase of the year. Toronto (+2.4%) and Ottawa (+1.4%) recorded the next largest quarterly increases in non-residential construction costs.

Year-over-year growth in construction costs moderates from previous highs
Construction costs for residential buildings in the 11-CMA composite rose 15.4% year over year in the fourth quarter, whereas non-residential building construction costs rose 11.1% year over year during the same period. Both year-over-year residential and year-over-year non-residential construction cost growth in the current quarter moderated from previous highs.

Toronto led year-over-year growth in construction costs for both residential (+21.9%) and non-residential (+14.5%) buildings, followed by Edmonton for residential buildings (+16.0%) and Moncton for non-residential buildings (+13.3%).

Source: Statistics Canada - statcan.gc.ca