Labour cost growth proves to be a major driver of the trend
Residential building construction costs saw their greatest increase since Q2 2021 with a significant 5.6% upswing during the first quarter of 2022, according to Statistics Canada.
A major reason for this increase – which was a stark departure from the moderation seen in the two quarters immediately prior – was the steady rise in labour costs.
“A surge in the number of vacancies for construction trades has contributed to increased wages in these occupations. In addition, amid rising fuel prices, contractors cited that a larger share of their expenses were now allocated to the transportation of their building materials,” StatCan reported.
StatCan said that the majority of the 11 census metropolitan areas (CMAs) covered by its market survey registered larger quarterly increases than the previous two quarters.
Rebounding softwood lumber prices were another crucial driver of the increase in costs, StatCan added.
Read more: What’s driving Canada’s current lack of housing supply?
Residential construction costs saw the greatest increases in Calgary (up by 6.9%), followed by Edmonton and Toronto (both up by 6.8%).
“While the construction costs to build a single-detached house in Toronto grew the most in the first quarter, the cost to build townhouses rose the most of all the buildings in scope for the survey in both Calgary and Edmonton,” StatCan said.
In Calgary and Edmonton, this surge coincided with 15-year highs in monthly home price increases. Calgary recorded its recent high in March 2022 (up by 5.2%), while Edmonton reached its recent high the month before (up by 3.7%).
