On-Site Magazine

Counterintuitive Consequences

By Adam Freill   

Construction

In their push to reduce the cost of housing, government incentives are likely to have an opposite effect on affordability, at least in the short-term.

Adam Freill, Editor
On-Site Magazine

In their push to reduce the cost of housing, government incentives are likely to have an opposite effect on affordability, at least in the short-term, with the impact of rising construction costs being felt in housing, as well as in Canada’s ICI and civil construction segments.

A recent RBC Economics report suggests that a million of the 1.9 million new households expected to be created by 2030 will not be able to buy a home if affordability stays where it is, and 40 per cent of these households won’t be able to afford rent either.

“The current affordability crisis has been driven by a massive undersupply of housing in the face of booming demand,” explained RBC Economics’ Robert Hogue.

To help with affordability, the federal government put forward a housing plan for 3.87 million new homes by 2031, or 2 million more than what would typically be built by 2031. In addition to this acceleration of residential building, new roads, sewers, plazas, schools, and so forth will be needed to support this growing population, bringing even more construction activity forward.

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The timing for this extra activity may not be ideal, however, as many segments of the non-residential industry are already busy and have healthy backlogs. As more segments start to pick up, demand for labour and materials will bring additional cost strains to all segments.

Increases to the industry’s labour pool are part of the federal plan, but finding new workers is something that the industry has struggled with for decades, and importing workers actually adds to the housing crisis.

So, where does that leave us?

Well, despite having to pay more for materials and compete harder for workers (and yes, we need to encourage immigration of trade professionals), having the ability to choose your projects is not a bad spot to be in.

Ensuring that you have the personnel and subcontractors available to tackle these projects could be a challenge, however, so keep the good people you have. Perhaps check out Jesse Unke’s column, as well as our DEI Summit coverage (in the June 2024 digital edition of On-Site) for some tips. And keep a close eye on your costs so that there are still a few dollars of profit left at the end of each project.

Until next time, stay safe and do good work.

 

Adam Freill

Editor

On-Site Magazine

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