Canadian home builders have faced soaring labor and material costs, and now there’s confirmation. The Statistics Canada (Stat Can) building construction price index made a record climb in the second quarter of 2021. Costs jumped significantly higher for homebuilders, even if just compared to non-residential construction. Homebuilders saw the fastest increases in “hot” housing markets like Ottawa and Toronto.
Residential Construction Costs Saw The Largest Increase On Record
Residential construction costs are soaring, as labor and materials get squeezed. Costs increased 7.5% in just the second quarter of 2021. This is a sharp acceleration from the 4.9% increase seen in the first quarter of the year. Stat Can said it was the largest jump in construction costs over the history of the index. Though the index only goes back to 2017, so it most likely is the biggest increase in a couple of decades.
Canadian Residential Building Construction Price Growth
The annual change in the building construction price index for residential units.
Source: Stat Can; Better Dwelling.
*Canada is an aggregate index of the 11 major CMAs.
On an annual basis, construction costs for residential housing soared. The agency estimates annual growth at the national level was 18.8% for the second quarter of 2021. Costs increased the fastest in Calgary (+31.4%) and Ottawa (+28.4%), with Toronto and Edmonton in a tie for third (+22.4%). Yes, cost inflation is reminiscent of the size of inflation seen in the early 1980s.
Non-Residential Construction Costs Are Fast Rising, But Less Than Half The Rate of Housing
Non-residential building costs are surging higher, but not as fast as housing costs. The segment saw prices jump 3.7% in the second quarter of 2021, and are up 5.7% from a year before. In case you missed it, more than half of the increase over the past year was in the most recent quarter. Growth is definitely accelerating.
Canadian Non-Residential Building Construction Price Growth
The annual change in the building construction price index for non-residential units.
Source: Stat Can; Better Dwelling.
*Canada is an aggregate index of the 11 major CMAs.
Big cities managed to see costs rise faster for non-residential construction as well. Costs increased fastest in Ottawa (+10.1%), Montreal (+8.4%), and Toronto (+7.7%). Vancouver (+3.2%) was actually one of the more tame markets, coming in under the national rate.
Construction costs have been soaring along with the cost of everything else. It’s worth keeping in mind this is quarterly data, and the second quarter was very volatile. It started with some of the fastest growth on record for some commodities like lumber. By the end of the quarter, things had cooled down significantly. Not quite to the point of pre-pandemic prices, but lower. This should be better reflected in the third quarter numbers.
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Ottawa is growing like crazy, high demand hence high prices. If you missed Toronto and Vancouver you don’t wanna miss Ottawa.
Very cold place that Ottawa, who wants to be there. No point to pay premium.
I would recommend Turkey for 1/5 price, of Ottawa, better climate, good health system, great food, fair education.
You can own huge 200 sq meters apartment facing sea side with very low condo fees for 150 k.
I would recommend Cuba for 1/10 of that price.
If you missed Toronto and Vancouver, you don’t want to miss Havana .
Eventually Fidel’s family will loose power, much earlier than your Canadian slavery mortgage will end.