Only Calgary and Edmonton higher among 6 centres tracked
Derrick Penner
Sun
The cost to build shopping centres, factories and schools rose 12.9 per cent in Vancouver in 2006, the third-highest level among the six major centres tracked by Statistics Canada.
The agency on Monday reported that Greater Vancouver’s score on its non-residential building construction index rose four per cent during the fourth quarter of 2006, and 12.9 per cent over the year as a whole.
Vancouver’s index score stood at 147.5 by the end of 2006, which was ahead of every other major centre except Calgary and Edmonton.
In B.C., construction inflation has been fuelled by a multi-billion-dollar building boom that pulled the industry out of a severe slowdown that depressed wages relative to other jurisdictions for close to a decade.
High demand for labour now, however, has forced contractors into a game of “catch-up” on labour rates.
But Keith Sashaw, president of the Vancouver Regional Construction Association, said that in 2006 high demand for construction materials also pushed prices up.
“Labour [wage raises] was a portion of it, but the bulk was real, globally driven pressure on [prices for] construction materials,” Sashaw said.
He added that extremely high demand in China for commodity-based construction materials, such as copper and steel, was a big factor in the rising prices.
Sashaw said the expectation is for material prices and labour rates to increase again in 2007.
The construction sector has absorbed most of the big raises required to catch B.C. workers up to other provinces. Sashaw also expects that a slowdown of housing construction in this province to provide some workers on the non-residential side to keep wage pressures down.
Sashaw added that the slowdown or residential construction in the U.S. is bringing down demand and prices for materials.
Relatively high oil prices are expected to generate still-higher prices for petroleum-based building materials and the fuel to transport materials to construction sites. Sashaw said overall non-residential construction prices are expected to rise seven to eight per cent in 2007.
“Generally speaking, we see costs getting more under control than they were in 2006 and 2005,” Sashaw said.
Calgary’s index score hit 166.3 at the end of 2006, which was up 5.9-per-cent over the fourth quarter and 18.8-per-cent for the entire year. Edmonton’s index score hit 160.5, up 5.5 per cent over the fourth quarter and 16.6 per cent over all of 2006.
© The Vancouver Sun 2007
