Construction cost increases slowing
Building construction costs rose again in the first quarter of 2024, but there are signs inflationary pressures may be easing.
Statistics Canada reports that residential building construction costs rose by 0.8% in the first quarter. That follows an increase of 1.1% in the previous quarter. Non-residential building construction costs also rose by 0.8% in the first quarter – the same as in the previous quarter.
The changes mark the slowest quarterly growth in residential building construction costs since the second quarter of 2020 and the slowest quarterly growth in non-residential building construction costs since the fourth quarter of the same year.
Year over year, construction costs for residential buildings rose 5.2% in the first quarter of 2024 in the 11-census metropolitan area (CMA) composite, while non-residential building construction costs saw a slightly more modest increase of 4.6%.
Skilled labour shortages and the resulting increases in labour rates, availability of materials, interest rate pressure, and building codes updates were all reported as key factors impacting the construction sector.
In the first quarter, residential building construction costs rose across the 11 CMAs measured. Halifax (+1.8%) and Calgary (+1.8%) experienced the largest quarterly increases. Ottawa (+0.1%) experienced the smallest increase in residential construction costs throughout the quarter.
In the 11-CMA composite, the cost to build single-detached houses (+1.0%) recorded the most pressure of all residential buildings in scope for the survey, followed by that of townhouses (+0.8%).
In overall residential building construction divisions, masonry (+2.3%) and earthworks (+2.3%) noted the largest quarterly increases in the first quarter. Conveying equipment (-0.3%) and electrical (-0.1%) were the only two divisions to experience quarterly price declines.
Meanwhile, the costs to build non-residential buildings increased the most in Saskatoon (+1.8%) in the first quarter, followed by Moncton (+ 1.1%).
Of all non-residential buildings surveyed, the cost to build a factory (+1.0%) rose the most in the 11-CMA composite in the quarter. Warehouses (+0.9%) followed behind closely.
Non-residential building construction costs increased across all but two divisions measured. General requirements, concrete, conveying equipment, and equipment each rose 1.1%. Electrical (-0.3%) and integrated automation (-0.1%) experienced cost declines.