As we continue our series on how rising oil and gas prices are effecting the real estate industry, this week we would like to focus on how the energy crisis is impacting the cost of new construction.
The cost of all building materials are going up, some at alarming rates. Builders are pausing and reassessing their costs and unit margins on a weekly basis. Inevitably there will be a lull in new construction until markets begin rising fast enough to keep pace with inflation. We anticipate that there will be a lag time before that happens. In the mean time developers will finish the projects they have started and prices will necessarily be much higher to cover their costs.
The cost of materials themselves have increased dramatically because of the energy cost of producing them at source, as well as the transportation cost increases to have them shipped to the site. This is particularly significant for those of us on Vancouver Island because of proximity to the manufacturers and ferry costs. Combined with a labour shortage in Canada of the trades, this is making life very uncomfortable for builders and developers.
Numerous materials containing oil derivatives ie. rubbers, wiring conduit, plastics, pipes carpet, paint, vinyl, etc., will also see significantly inflated prices.
All of these combined factors are and will continue to culminate in higher building material cost and consequently higher new construction prices past on to the consumer.
Best Regards,
The Debbie Simmonds Lifestyles Real Estate Team
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