February 18, 2022 – Nationwide, Residential Building construction costs rose 3.8% in the fourth quarter of 2021, Statscan reports, following a similar rise in the third quarter. Non-residential Building construction costs rose 2.7% in the fourth quarter, down slightly from the previous quarter.
Construction costs Residential buildings increased the most in Montreal, followed by Toronto and Vancouver. In the fourth quarter, the cost of constructing low-rise apartments rose the most of all buildings surveyed in Montreal and Vancouver, while single-detached homes led the growth in Toronto.
Moncton saw the smallest quarterly increase in the cost of building residential buildings, followed by Saskatoon and Ottawa.
Non-residential building construction costs increased the most in Ottawa, Toronto and Edmonton. However, for both Ottawa and Toronto, quarterly growth “decelerated” from the previous quarter, according to Statscan.
While the growth in non-residential building construction prices in some of the surveyed census metropolitan areas (CMAs) slowed in the fourth quarter, with Saskatoon recording its strongest quarterly price growth of the year. It is in this CMA that the cost of constructing bus depots with maintenance and repair facilities, as well as factories, has increased the most.
Wood, plastics and composites continued to be the main contributor to rising prices in the construction of residential buildings. Softwood lumber prices rose again in October and November, but not enough to offset the sharp drop seen from May to August.
Despite this increase, contractors reported a slower rate of increase in wood product prices compared to the third quarter, with some noting a decline in prices. This was offset by stronger price growth for other important residential construction inputs, including finishes (e.g. drywall, paint), windows and doors, and heat and weather protection components. humidity.
The increase in construction costs for non-residential buildings is mainly attributable to an increase in the prices of metal fabrication products and concrete elements (including steel reinforcements). Contractors mainly attributed the rising costs to rising labor costs resulting from the shortage of skilled labor and the rising price of steel products, which was hit by supply constraints. supply.
Building construction costs for Residential Construction in the 11-city composite rose 21.7% year-on-year in the fourth quarter, surpassing the previous record high set in the third quarter. The largest increases were recorded in Calgary, Toronto, Edmonton and Ottawa.
Non-residential construction construction costs rose 11.2% year over year in the fourth quarter, the largest increase since the third quarter of 2008. peaks in the fourth quarter.
The pandemic continued to impact the construction sector, Statscan notes, as contractors once again cited that increased labor costs and building material prices further increase their costs. This has resulted in record annual price increases for construction costs of residential and non-residential buildings.
The number of building permits and the value of permits increased for both the residential and non-residential sector in 2021 compared to 2020, further confirming the growth in demand for labor and construction materials. The increase in the value of building permits issued was also a factor that boosted demand for heavily used building materials, such as lumber and steel products. These materials have been impacted by supply chain issues throughout 2021 due to the pandemic.
Vacancy rate in the Canadian construction industry grew at a faster rate in the second half of 2021 compared to the first half, showing an increase in the need for skilled labor during a period of increasing demand. This put upward pressure on the costs that Canadian builders had to pay for labour.
In 2021, the 11-city composite for residential building construction costs rose 18.1%, its largest annual increase since its inception in 2017.
Annual construction costs for residential buildings increased the most for townhouses and single-family homes (both up 22.5%) from 2020 to 2021.
Growth in residential building construction costs in 2021 surpassed previous highs in all CMAs surveyed. Cost increases reached double digits in all CMAs except Vancouver (+9.5%), with the strongest annual growth in Calgary and Ottawa.
The 11-city composite for the cost of non-residential construction rose 6.9% in 2021 from 2020. This is the largest annual increase since 2008. Factories and bus depots with maintenance and repair facilities saw their construction costs increase the most on an annual basis.
Non-residential construction costs rose the most in Ottawa and Toronto, with Ottawa posting the strongest annual growth since the index began in 1981.
Note: The cities that make up the Statscan 11-City Composite are: St. John’s, Halifax, Moncton, Montreal, Ottawa, Toronto, Winnipeg, Saskatoon, Calgary, Edmonton, Vancouver.