Construction Costs, Labour, Permits & Supply Chains: What’s Really Happening
Construction costs are rising fast, and it’s affecting everyone — homeowners trying to renovate, developers trying to build new housing, and contractors trying to deliver projects on time and on budget. Part of the change is cyclical, part is structural, and part reflects how global markets have shifted since the pandemic.
Why Are Construction Costs Rising So Fast?
Several forces are pushing costs higher. Material prices have increased faster than general inflation in many regions, including British Columbia. A recent industry report showed construction material costs rising about four percent year-over-year — roughly double the overall inflation rate — while labour costs have also climbed significantly. These persistent increases raise the overall price of building, from framing lumber to steel and concrete.
Tariffs and trade uncertainty can also add costs. For example, tariffs on imported steel and aluminum can inflate costs for contractors who depend on those materials, even if not every material category is affected.
Affordability and New Home Prices
These cost pressures make housing less affordable because the price of new homes is closely tied to construction costs. When it costs more to build, that gets reflected in the final sale price of homes, whether they are new detached houses or multi-unit buildings. As a result, homeowners and buyers face harder decisions on what they can afford.
Labour & Skills: Why Are So Many Trades Hard to Find?
The construction labour market is tight almost everywhere you look. There are a few reasons for this. Many experienced tradespeople are retiring, and there haven’t been enough newcomers entering the field to replace them. At the same time, demand for construction — especially housing — continues to grow. Industry reports show job vacancies among skilled trades rising rapidly, and projections suggest shortages could worsen if action isn’t taken.
This shortage increases costs in two ways. First, it puts upward pressure on wages as employers compete for skilled workers. Second, it can slow project timelines when crews are understaffed, which means longer projects and potentially higher overall labour costs.
Permits & Regulations: Why They Take Time
Permits and regulatory approvals can feel slow, and for good reason: governments need to ensure safety, environmental compliance, and long-term resilience in every building. But that means there are multiple layers of review — municipal, regional, and sometimes provincial or federal — before work can legally begin.
For specialized or alternative home types, like cob or other natural building methods, there’s often an added layer of complexity. Because these methods are less common, officials may need extra studies or engineering reviews, and specialized codes may apply. While these regulations aim to protect safety and environmental standards, they can add time and cost.
Project Delays & Supply Chains
Delays in construction aren’t always about labour. Supply chain issues still ripple through the industry. Even after global supply chains recovered from pandemic disruptions, bottlenecks can occur for specific products — especially when demand spikes unexpectedly.
Poor sequencing (where materials arrive in the wrong order), transportation delays, and manufacturing backlogs can all delay jobs. To avoid them, good project planning involves ordering materials early, confirming delivery windows, and having backup plans where possible.
A More Resilient Future? Modular, Prefab & Innovation
Innovation offers partial solutions. Prefabricated and modular construction — where much of a building is assembled off-site in a factory and then installed on location — can reduce timeline uncertainty and labour pressure. These methods can shorten construction schedules and lower some costs by minimizing on-site labour and waste.
While modular won’t replace all traditional construction, it can be a powerful tool in affordable housing and high-volume projects. Government initiatives, such as Canada’s Build Canada Homes program, are designed to expand these techniques and support faster, more cost-efficient construction.
Conclusion
Construction costs, labour shortages, permitting delays, and supply chain issues are real and interconnected. None of these challenges are simple to solve, but understanding the big picture helps homeowners plan better, helps buyers set more realistic expectations, and helps contractors communicate more clearly. The industry is responding with innovation and policy reforms, but it will take time for these efforts to fully translate into lower costs and shorter timelines.
Comments