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Residential Construction Costs Increases in Q4-2021


Under Real Estate

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February 23rd, 2022

The cost of building a home in Canada continued to rise in the last quarter of 2021 according to new data released by Statistics Canada.

Updated building construction price indexes published last week show that residential building construction costs grew 3.8% nationally in Q4-2021, which follows a “similar rise,” from the previous quarter. By comparison non-residential construction costs were up 2.7% from Q3-2021 to Q4-2021, which shows signs of a deceleration.

On a yearly basis, residential construction costs were up 21.7 per cent in the last quarter, surpassing the latest high recorded in Q3-2021. Annually, increases were highest in Calgary, Toronto, Edmonton and Ottawa.

Montréal reports highest quarterly cost increases in Q4-2021

Between the 11 census metropolitan areas (CMAs) that Statistics Canada surveyed, eight CMAs reported moderating growth in residential construction prices in Q4-2021. Some regions even reported their lowest quarterly increases seen in 2021.

Montréal recorded the highest increases for residential construction, rising 4.9% from quarter-to-quarter. Toronto and Vancouver followed closely behind, were costs accelerated 4.5% and 4.1% during the same period. Residential construction expenses grew the least in Moncton, up by just 0.7% from Q3-2021 to Q4-2021.

“In the fourth quarter, the cost to build low-rise apartments grew the most out of all of the buildings in scope for the survey in both Montréal and Vancouver, while single-detached houses led the growth in Toronto,” the report explained.

Wood and plastic largest contributor to price increases

Rising prices in the residential construction sector were primarily due to wood, plastics and composites.

The increase in softwood lumber prices in October and November was not enough to offset the large decline recorded from May to August in 2021.

“Despite this uptick, contractors reported a slower increase rate in the prices of wood products, compared with the third quarter, with some noting a decline in prices,” said the report.

Other residential construction items, including finishes, windows, doors and thermal materials, observed strong price growth.

2021 plagued by shortages and growing expenses

Shortages stemming from the COVID-19 pandemic continued to place pressure on the construction industry in 2021.

Last year, the 11-city composite for residential building construction costs shot up 18.1%, the largest annual increase since its inception in 2017. Townhomes and single-detached properties recorded the highest yearly construction cost increases, jumping 22.5% each from 2020 to 2021. With the exception of Vancouver (9.5%), cost increases were in double-digit territory in all CMAs.

According to Statistics Canada, contractors noted that increases in labour costs and building material prices were still forcing up their costs, resulting in record yearly price increases in both the residential and non-residential industries.

Investment in residential construction rises in 2021

In a separate report, Statistics Canada stated that residential construction investment jumped 2.2% to $13.4 billion during December 2021. Ontario accounted for more than half of the monthly increase, where investments increased 3.1% on a monthly basis by $5,840.4 million.

Although their total investment amounts were smaller, Newfoundland and Labrador, Nova Scotia, New Brunswick and Manitoba saw monthly increases of 14.6%, 10.4%, 15.8% and 9.6%. When seasonally-adjusted, total investments in residential construction equalled $70.8 million, $373.7 million, $180.7 million and $438.1 million.

Investment in building construction had a record year in 2021 overall, rising 19.3% to $218.2 billion. For residential construction specifically, investment was up 28.4% to $162.0 billion.

Residential Construction Costs Climbed Again in Last Quarter of 2021 by Michelle McNally | Lival

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