Even as inflation cools across the country, B.C.’s construction industry continues to feel the heat from rising costs and economic uncertainty, according to an industry report.
The B.C. Construction Association released its semi-annual report on the province’s construction sector on Tuesday (Oct. 28), with data suggesting that the cost of building materials has increased twice as fast as inflation.
While the Bank of Canada’s inflation target means the yearly increase in the overall cost of goods and services should ideally be two per cent, the association notes the cost of construction materials has increased by double that value in the past year.
Higher building costs aren’t the only threats to B.C.’s affordability crisis, and association president Chris Atchison said increasing costs are compounding on top of pre-existing economic concerns.
“These pressures are driving construction costs higher at a time when trade uncertainty is already causing many to rethink their investments,” Atchison said in a statement.
The increase in associated costs during a time of economic turbulence has set off a butterfly effect with investors getting hesitant about supporting new developments — a “secondary impact” on an already uncertain industry.
The higher financial risk has not stalled activity in the construction sector, and the report found that the number of permits issued for both commercial and residential developments is up by nine and 10 per cent, respectively.
However, the substantial up-front costs have hampered development and the province took measures to mitigate delays in the construction of new homes resulting from financial burden by announcing flexible payment timelines for builders in July.
The construction industry has remained the top employer in B.C.’s goods sector for the past five years. The report estimates that the 267,400 construction workers in B.C. contribute to 9.2 per cent of the province’s gross domestic product, a total of $28.5 billion.
Despite the economic uncertainty surrounding the construction sector, there have also been legislative changes to improve working conditions for those in construction.
Earlier in October, the provincial government announced the introduction of prompt payment legislation. The new rules will ensure those in construction are paid “fairly and on time” for their work.
The construction association has been one of the major advocates for the legislation.
“There are many external pressures on our industry that we cannot control, but advocating for prompt payment and fairness across our industry is something we can,” Atchison said.
Although the financial state of the construction sector is affected by economic uncertainty, the report still shows a strong growth in the workforce, with both the number of construction jobs and wages showing steady increases.
Sally Ji is a Kwantlen Polytechnic University practicum student working with Black Press Media.
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