Rise of construction costs slows in Q3
By Adam Freill
ConstructionAlthough construction costs continued to rise in the third quarter, the rate of increase has dropped from that of Q2.
Building construction price indexes, quarterly change, third quarter of 2023. (Source: Statistics Canada, Table 18-10-0276-02)
Residential building construction costs increased one per cent in the third quarter, while non-residential building construction costs rose 0.9 per cent, reports Statistics Canada in its most recent building construction price index. While both sectors saw costs increase, the increases were both lower than those reported in Q2, when the quarterly change in the residential sector was two per cent, and the non-residential sector saw prices rise 1.6 per cent.
The third quarter was the slowest quarterly growth in residential building construction costs since the second quarter of 2020 and in non-residential building construction costs since the fourth quarter of that same year.
Year-over-year, construction costs for residential buildings in the 11-census metropolitan area composite rose six per cent in the third quarter of 2023, while non-residential building construction costs saw a similar increase, rising 5.9 per cent. Toronto’s 10 per cent increase led year-over-year growth in construction costs for residential buildings, while Moncton led growth for non-residential buildings as it saw costs increase by more than 12 per cent.
Skilled labour shortages and the resulting increases in wage rates, availability of materials, and interest rate pressure were all reported as key factors impacting the construction sector.
