Wood has long been scarce and highly valued in essentially treeless Nunavut, but the price of lumber and plywood has skyrocketed over the past several months, driving up construction costs.
There’s a possibility that some public projects may consequently be delayed or cancelled, the Government of Nunavut acknowledged.
“When the bid prices come in over budget … some projects might be reconsidered, others might be delayed,” the Department of Community and Government Services (CGS) stated. “(The) GN will adjust future project budgets based on the evolving market conditions at the time. Inflationary realities will influence project budgets in a new way going forward.
The price of lumber jumped by 30 per cent over the past year, according to the GN. But it’s not just lumber expenses that have been climbing steadily. Steel has risen by up to 25 per cent over the past 12 months, insulation is up by 22 per cent and drywall is almost 20 per cent more expensive year over year, the GN stated. Copper is up more than 30 per cent from 2020.
“In general, the demand for construction materials has increased since COVID-19,” reads a statement from CGS.
Among the reasons for the spike in price of construction materials are disruptions in supply chains, declining production due to labour shortages and a growing demand for home renovations.
Commodities and materials are not the only components that influence bid prices, however. Risk, COVID-19, freight, fuel, labour and accommodations are some of the other factors at play.
“Another contributing factor to rising costs was that GN has had to pay for many tradespeople while they spend time in the construction hubs,” CGS stated. “The cost of this alone during the 2020 construction season was an estimated at $20.4 million. As we see that COVID-19 is now impacting the 2021 construction season, we do expect that the impact on the general cost of construction will continue.
“It is worth noting that not all projects are impacted the same as the components of materials required vary among types of projects. The GN has always had to balance the fiscal challenges with delivering the maximum infrastructure projects to Nunavummiut and COVID-19 has added new fiscal challenges and realities to this process.”
Statistics Canada data released earlier this month shows that residential building construction increased 5.6 per cent in the first quarter of 2021, marking the largest increase since that particular statistic was first tracked in 2017. Historically low interest rates are another reason Statistics Canada cited for the surge in demand for housing.
The average cost of building each new public housing unit was already soaring for the GN, reaching $641,831 in 2019-20. That was a 20 per cent escalation from $533,689 a year earlier. In 2017-18, it cost $481,000 to construct a new home, on average.
Speaking in the legislative assembly in October 2020, Nunavut Housing Corporation president Terry Audla attributed the rising costs to inflation, such as the surging prices of materials and shipping. He said the housing corporation’s changes in design, such as roofing that’s less prone to mould accumulation, also accounts for greater expenses.
In Clyde River, the craving for building materials may have led to a crime. A resident posted on social media earlier this month that 30 sheets of plywood went missing from his employer’s property. He asked for the community’s help if someone tries to sell any of the goods.