Why Are Construction Costs Still Rising So Quickly?

Construction costs have climbed more than 65% since late 2019, far outpacing the 17.2% rise in inflation. Although material costs have stabilized, construction costs are still rising. The main driver is now wages, which are being pushed higher by sustained demand for labour and new collective agreements. Productivity, which has been steadily declining for years, is adding to these pressures. And demand for labour is unlikely to slow given the strength of housing starts and the major public infrastructure projects on the horizon, such as Hydro‑Québec’s action plan and the high-speed train linking Quebec City to Toronto. Although material costs are expected to ease slightly, overall construction costs will remain elevated due to rising wages and strong competition for skilled workers. We see the residential Building Construction Price Index (BCPI) increasing by approximately 4% by the end of 2025, followed by a further 5% in 2026.