Construction costs jump in early 2020, prior to COVID-19

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Construction costs for both residential and non-residential buildings rose in the first quarter of 2020—and may be significantly impacted by COVID-19 in the second quarter, Statistics Canada reports.

The agency’s report for the first quarter of the year covers the period ending March 20. By that point in time, the impacts of the COVID-19 pandemic were only beginning to be felt across the country. At that time, all provinces except Quebec continued to list construction as among their essential services. As a result, the report shows increases of 0.6 percent in residential building construction, and 0.5 percent in non-residential building construction.

Across the country, construction costs rose for all types of residential and non-residential buildings. Increases ranged from 0.4 percent to 0.7 percent. Among residential buildings, the largest quarterly price increase was for low-rise apartment buildings (+0.7 percent). For non-residential buildings, construction costs rose the most for bus depots (+0.6 percent).

Residential building construction costs increased the most in Halifax (+1.2 percent), followed by Calgary and Ottawa (both up 1.1 percent). On the non-residential side, it cost more to build in Toronto (+0.7 percent), Ottawa and Montréal (both up 0.6 percent).

On an annual basis, construction costs for residential buildings rose the most in Ottawa (+3.6 percent) and Montréal (+3.1 percent). Construction costs for all residential buildings in Ottawa have been increasing steadily since Statistics Canada began collecting such metrics in 2017.

For non-residential buildings, the largest year-over-year price increases were in Montréal (+3.4 percent), followed by Toronto (+2.9 percent).

It remains to be seen how the COVID-19 pandemic will influence construction costs. Supply chain disruptions and worsening shortages of skilled workers—due in part to illnesses and perceived health and safety risks—may continue to affect construction costs. Those increases, however, may be mitigated by decreases in demand for non-essential construction activities.

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