For the first time in 35 years, the price of new homes has increased by more than 20% in the last year, and it is far from over if we believe the explosion in the price of materials of construction.
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“In Quebec, the [prix des] houses have increased by 20% in the last year. This is a record since the first data of 1987″, explains to the Journal Paul Cardinal, director of the economic department of the Association of Construction and Housing Professionals of Quebec (APCHQ).
At the Association de la construction du Québec (ACQ), we point to wages and materials, which represent half the price of a new construction.
“We negotiated wage increases of 2% during the last collective agreements and the price of materials jumped by more than 33% in the last year, so that is necessarily reflected in the invoice”, underlines its spokesperson Guillaume Houle. (See picture)
If the 0.7% increase in the price of wood seems slight, it is because it has already reached peaks. Last February, a spruce 2×4 sold for $6.49, 125% more than before the COVID-19 pandemic when it retailed for $2.89.
“Since then, it has remained high, but it increases more slowly than other materials. It’s a roller coaster,” observes Guillaume Houle of the ACQ, who provided the Journal examples of observed increases.
While the price of wood fell significantly in the fall, it has just taken off once more.
“We have forecasts of a 10% increase by January 2023, but it’s still very volatile,” analyzes Paul Cardinal of the APCHQ.
Last Thursday, during the passage of Journal in a Home Depot on the South Shore of Montreal, general contractors like Christian, from Rénovations NCL inc., were busy finding their materials at a good price.
“The plumbing has gone up quite a bit. Everything went up, it had gone down a short time ago, but it’s gone once more, ”shared the man while loading his truck. “I have clients who understand that food is more expensive, and it’s the same for construction,” he philosophized.
A Perfect Storm
For Éric Côté, CEO of the Corporation of General Contractors of Quebec (CEGQ), we are witnessing a perfect storm with shortages, delivery times and absenteeism on construction sites due to COVID-19.
“There is no indication that supply chain disruptions will subside. It’s untenable for entrepreneurs and their customers,” he says.
“We often see houses that will cost $10,000 to $70,000 more because of the price of materials,” said Gina Baroni, director of the organization SOS Residential Guarantee Plan.
“There are a large number of entrepreneurs who fail to fully justify these increases,” she says. Last year, his organization helped 78 people, who received their homes late, in the midst of a pandemic.
For Marc-André Harnois, general manager of the Association of consumers for the quality of construction (ACQC), these cases are legion.
“Since prices have jumped, we have seen how much a preliminary contract is ultimately not worth much, and that is much more what is revolting,” he concludes.
There were 67,962 housing starts in Quebec last year, according to the APCHQ, which expects a drop of 11,962, or 18%, this year, to 56,000 housing starts.
