Building Construction Price Indexes: Q1 2024
The latest data from Statistics Canada reveals a moderate increase in building construction costs across Canada in the first quarter of 2024. Residential building construction costs rose by 0.8%, while non-residential building construction costs saw a similar increase of 0.8%. This marks 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.
National Overview
Year-over-year, construction costs for residential buildings increased by 5.2% in the 11-census metropolitan area (CMA) composite, while non-residential building construction costs saw a slightly more modest increase of 4.6%. Halifax (+8.1%) led the year-over-year growth in construction costs for residential buildings, while Moncton (+7.9%) led the growth of non-residential buildings.
Residential Building Construction Costs
The increase in residential building construction costs is attributed to various factors, including:
- Skilled labor shortages and resulting increases in labor rates
- Availability of materials
- Interest rate pressure
- Building codes updates
Halifax (+1.8%) and Calgary (+1.8%) experienced the largest quarterly increases, while Ottawa (+0.1%) experienced the smallest increase in residential construction costs. The cost to build single-detached houses (+1.0%) recorded the most pressure of all residential buildings, followed by townhouses (+0.8%). Masonry (+2.3%) and earthworks (+2.3%) noted the largest quarterly increases in the first quarter.
Non-Residential Building Construction Costs
The increase in non-residential building construction costs is primarily driven by:
- Rising general requirement and concrete costs
Costs to construct non-residential buildings increased the most in Saskatoon (+1.8%) in the first quarter, followed by Moncton (+1.1%). The cost to build a factory (+1.0%) rose the most in the 11-CMA composite in the quarter, followed by warehouses (+0.9%). General requirements, concrete, conveying equipment, and equipment each rose 1.1%, while electrical (-0.3%) and integrated automation (-0.1%) experienced cost declines.
Impact on the Construction Industry
The moderate increase in building construction costs may have a ripple effect on the construction industry, potentially leading to:
- Increased project costs for developers and builders
- Higher prices for consumers and businesses
- Potential delays or cancellations of projects due to increased costs
- Increased pressure on skilled labor and materials
Regional Variations
The data highlights regional variations in building construction costs, with:
- Halifax and Calgary leading the growth in residential construction costs
- Saskatoon and Moncton leading the growth in non-residential construction costs
- Ottawa experiencing the smallest increase in residential construction costs
Conclusion
The Building Construction Price Indexes for the first quarter of 2024 indicate a moderate increase in building construction costs across Canada. The data highlights the impact of various factors, including labor shortages, material availability, and interest rate pressure, on the construction industry. Understanding these trends is crucial for developers, builders, and policymakers to make informed decisions and navigate the complex construction landscape.
Coldwell Banker Horizon Realty prioritizes staying informed about market trends to provide our clients with the most up-to-date information. This allows us to offer the best possible service when buying or selling a home.
Sources: Statistics Canada - Building Construction Price Indexes
The content of this article is for informational purposes only and should not be considered as financial, legal, or professional advice. Coldwell Banker Horizon Realty makes no representations as to the accuracy, completeness, or suitability of the information provided. Readers are encouraged to consult with qualified professionals regarding their specific real estate, financial, and legal circumstances. The views expressed in this article may not necessarily reflect the views of Coldwell Banker Horizon Realty or its agents. Real estate market conditions and government policies may change, and readers should verify the latest updates with appropriate professionals.
