Construction costs for residential buildings rose 3.8% in the fourth quarter of 2021, following a similar rise in the third quarter. Construction costs for non-residential buildings rose 2.7% in the fourth quarter, slightly decelerating from the previous quarter.
Building construction price indices, quarterly change
Moderating price growth in most census metropolitan areas
Of the 11 census metropolitan areas (CMAs) covered by the survey, 8 saw moderate growth in residential building construction prices during the fourth quarter, with some posting their lowest quarterly increases seen in 2021.
Construction costs for residential buildings rose 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.
Construction costs for non-residential buildings rose the most in Ottawa, Toronto and Edmonton. However, in both Ottawa and Toronto, quarterly growth slowed from the previous quarter.
While price growth for non-residential building construction in some of the surveyed CMAs slowed in the fourth quarter, Saskatoon recorded its strongest quarterly price growth of the year. The cost of constructing bus depots with maintenance and repair facilities, as well as factories, has increased the most in this region. CMA.
Higher lumber and steel costs continue to support price growth
Wood, plastics and composites continued to be the main contributor to higher 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 (drywall, paint, etc.), windows and doors, and heat and weather protection components. ‘humidity.
Increases in construction costs for non-residential buildings were mainly due to higher prices for fabricated metal products and concrete elements (including steel reinforcement). 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.
Year-over-year construction cost growth tops previous highs
Construction costs for residential buildings in all 11 cities rose 21.7% year over year in the fourth quarter, surpassing the previous high recorded in the third quarter. The largest increases were recorded in Calgary, Toronto, Edmonton and Ottawa.
Non-residential construction costs rose 11.2% year-over-year in the fourth quarter, the largest increase since the third quarter of 2008. Construction cost increases were the largest in Ottawa, Toronto and Edmonton, Ottawa and Toronto recording the New Year. year-over-year highs in the fourth quarter.
2021 in review
Shortages of labor and building materials persist in 2021
COVID-1The COVID-19 pandemic continued to impact the construction industry, with contractors once again indicating that rising labor costs and building material prices were pushing up further 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 as a result of the pandemic, leading to price increases.
Job vacancy rates in the Canadian construction industry increased at a faster pace in the second half of 2021 compared to the first half, showing an increase in the need for skilled labor during a period of demand growing. This put upward pressure on the costs that Canadian builders had to pay for labour.
Cost increases in the construction of residential buildings surpass previous highs
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.
Residential building construction cost growth in 2021 surpassed previous highs in every CMA investigation. Cost increases reached double digits in all CMAs except Vancouver (+9.5%), with the strongest annual growth in Calgary and Ottawa.
Rise in non-residential construction costs highest in more than a decade
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.
Notice to readers
The Building Construction Price Indexes are quarterly series that measure the change over time in the prices charged by contractors to construct a range of commercial, institutional, industrial and residential buildings in 11 census metropolitan areas: St. John’s , Halifax, Moncton, Montreal, Ottawa –Gatineau (Ontario part), Toronto, Winnipeg, Saskatoon, Calgary, Edmonton and Vancouver.
These buildings include six non-residential structures: an office building, a warehouse, a shopping mall, a factory, a school, and a bus depot with maintenance and repair facilities. In addition, indices are produced for five residential structures: a bungalow, a two-storey house, a townhouse, a high-rise apartment (five or more stories) and a high-rise apartment (less than five stories).
The contractor’s price reflects the value of all materials, labor, equipment, overhead and profit to construct a new building. It excludes value added taxes and all costs related to land, land assembly, building design, land development and real estate charges.
With each release, data for the previous quarter may have been revised. The index is not seasonally adjusted.
Statistics Canada launched the Producer Price Indices Portal as part of a suite of price portals and price indices. This webpage provides Canadians with a single point of access to a wide variety of statistics and measures related to producer prices.
The video “Producer price indicesis available on the Statistics Canada Training Institute webpage. It provides an introduction to Statistics Canada’s Producer Price Index.s—wwhat they are, how they are made and what they are used for.
For more information, or to inquire about the concepts, methods, or data quality of this release, contact us (toll-free 1-800-263-1136; 514-283-8300; [email protected]) or Media Relations ([email protected]).