November 6, 2023
Residential building construction costs increased 1.0% in the third quarter, following a 2.0% increase in the previous quarter. Meanwhile, non-residential building construction costs rose 0.9% in the third quarter, following a 1.6% increase in the previous quarter.
This marked 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 the same year.
Year over year, construction costs for residential buildings in the 11-census metropolitan area (CMA) composite rose 6.0% in the third quarter of 2023, while non-residential building construction costs saw a similar increase of 5.9%. Toronto (+10.0%) led year-over-year growth in construction costs for residential buildings, while Moncton (+12.3%) led growth for non-residential buildings.
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.
Atlantic provinces report largest increases in residential construction costs
In the third quarter, residential building construction costs rose in 9 of the 11 CMAs measured. St. John’s (+2.2%) saw the largest quarterly increase, followed by Halifax (+1.8%). Ottawa (-0.2%) was the only CMA to record a decline in residential construction costs.
In the 11-CMA composite, the cost to build high-rise apartment buildings (+1.7%) grew the most of all residential buildings in scope of the survey, followed by single-detached houses (+1.0%).
In overall residential building construction divisions, conveying equipment (+3.2%) and masonry (+3.1%) recorded the largest quarterly increases in the third quarter. Communications (-0.8%), which includes telecommunications and cabling products, and wood, plastics and composites (-0.6%) experienced quarterly price declines.
Rising equipment costs lead the increase in non-residential construction costs
Costs to construct non-residential buildings increased the most in Moncton and Saskatoon (each up 1.7%), followed by Vancouver (+1.2%) in the third quarter.
Of all non-residential buildings surveyed, the cost to build office buildings (+1.1%) rose the most in the 11-CMA composite, followed by bus depots, shopping centres, and warehouses (each up 1.0%) in the third quarter.
Non-residential building construction costs increased across most divisions, with conveying equipment (+2.1%) seeing the largest increase, followed by general requirements and equipment (each up 1.6%). Communications (-0.4%) and fire suppression (-0.1%) saw cost declines.