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Construction prices stabilizing in Alberta

Construction prices stabilizing in Alberta

Posted on: 5/24/2018 | Author: ATB Financial's Economics + Research Team

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Alberta's urban landscape is changing. Over the past few years, massive office towers, arenas, music centres and public libraries have transformed the look and feel of both downtown Edmonton and Calgary. Smaller cities have also seen their share of change. And while the cost of non-residential construction projects has nearly doubled from 20 years ago, prices have levelled off over the last few years.

The graph below shows the non-residential building construction price index for Edmonton compared with the average of 11 major urban centres. (The indices for both Edmonton and Calgary are similar so, for simplicity, only Edmonton’s is shown.) Construction costs in 2017 are set equal to 100.

The index lines illustrate how costs have risen over time. The economic boom of 2006-07 more than doubled construction costs in Alberta, but the recession of 2009-10 brought prices right back down. The national average shows a similar, if less pronounced, movement in cost.

The building boom of 2012-14 saw prices rise much more gradually. Correspondingly, prices fell more modestly during the recession of 2015-16.

With the recession behind us, prices of non-residential construction projects have shown little increase over the last several quarters. This price stability is likely to continue through this year and next as fewer new projects will reduce demand in the construction sector.

Construction costs, graph

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