The cost of building increased again in the first quarter of 2023.

The latest edition of Statistics Canada’s building construction price index finds that residential building construction costs increased 1.8%, while non-residential building construction costs rose 1.7%. Those figures build on increases of 1.1% and 1.6%, respectively, in the previous quarter.

Compared with the first quarter of last year, construction costs for residential buildings in Statistics Canada’s 11-census metropolitan area (CMA) composite rose 11.1%, whereas non-residential building construction costs rose 9.6%. Toronto (+17.7%) led year-over-year growth in construction costs for residential buildings, while Moncton (+14.2%) led growth for non-residential buildings.

Skilled labour shortages and the availability and cost of materials were reported by contractors as key issues across the construction sector.

Toronto leads the rise in residential construction costs

In the first quarter, residential building construction costs rose the most for conveying equipment and masonry (both up 4.0%), and equipment (+3.9%). Wood, plastics and composites (-0.2%) was the only division in residential construction to record a decrease in costs, which can be attributed to the continued decline in lumber prices.

In the 11-CMA composite, the cost to build high-rise apartments (+2.7%) grew the most of all residential buildings in scope for the survey, followed by low-rise apartments (+1.6%).

Costs to construct residential buildings increased the most in Toronto (+3.2%), followed by Halifax (+2.6%) and Vancouver (+2.3%). Calgary (-0.4%) was the only CMA to record a decline in construction costs in the first quarter.

Concrete contributes to the rising cost of non-residential construction

Non-residential building construction costs grew the most for conveying equipment (+3.0%) in the first quarter, followed by equipment (+2.9%) and concrete (+2.8%) divisions. The increase in concrete prices was a major contributor to the rise in costs as concrete is an important component in non-residential construction.

Of all non-residential buildings surveyed, the cost to build office buildings and warehouses (both up 1.8%) rose the most in the 11-CMA composite.

Costs to construct non-residential buildings increased the most in Moncton and Vancouver (both up 2.3%), followed by Ottawa (+2.0%).