Growth steady but construction costs remain problematic: Report
A Quarterly Construction Cost Report (QCR) Q2 2024 for North America from global construction cost consultant, Rider Levett Bucknall (RLB), provides insight on the state of the construction industry, and details indicative construction costs across various building sectors.
While uncertainty in the construction industry continues, there have been ups and downs despite no signs of growth slowing down. Labour costs have also been rising faster than in previous years, but construction companies remained focused on strategic planning and the acquisiton of skilled labour.
In the first quarter of 2024, there were 12,767 more workers in the industry in Alberta, in comparison to Q1 2023, in which growth attributed to a rise in housing starts and increased investment in building construction.
The report noted that the Alberta government plans to invest $25 billion over three years through Budget 2024 to build necessary infrastructure such as roads, schools, and hospitals for communities.
The Canada Mortgage and Housing Corporation (CMHC) data indicates that Alberta housing starts hit a new record with 13,560 new homes under construction from January to April 2024, a 60 per cent increase compared to April 2023.
Additionally, the report noted that the industrial work in Alberta, particularly in the energy sector, makes construction challenging. There is competition for skilled workers as a result of higher pay in industrial projects. Enrollment in post-secondary apprenticeship programs has increased because of higher funding from the provincial government.
In Ontario, the most prominent projects in the coming years are those related to power generation, transportation, and healthcare facilities. Canada’s three levels of government have agreed to finalize $4.7 billion in Ottawa funding to boost housing construction. The federal and provincial governments agreed that the province would receive $357 million in federal funds for affordable housing construction. As the province tries to meet its target of building 1.5 million homes by 2031, the Ontario government expressed confidence that the Bank of Canada’s recent interest rate cut will help spur housing development.
“The construction industry continues to experience strong demand, but uncertainty is being fueled by high interest rates and increasing labor costs for the rest of 2024. The approaching presidential election and potential policy adjustments are also contributing to this uncertainty,” said Paul Brussow, president of RLB North America. “Nevertheless, overall growth in the construction sector is expected to remain positive this year.”