Canadian real estate development and infrastructure construction cost increases will become more bearable, at least for a little while, says a new Altus Group report.

“On balance, it appears that the scales are tilting toward more moderation of construction costs over the next six to 12 months; however, this equilibrium may be short-lived as rapid population growth will inevitably drive increased demand for housing and infrastructure. states the report released Wednesday.

Cost escalation has continued to decelerate since the second half of 2022 as rapid interest-rate hikes in many of the world’s markets pushed inflation downward. While the consumer price index has demonstrated slowing inflation, sectors directly influencing construction costs have provided further evidence.

Container freight prices returned to pre-pandemic levels in the fourth quarter of 2023, and numerous commodity prices decreased from their historical peaks. In many cases, manufactured product costs also receded from “exceptionally high levels.”

But declines were largely offset by increases in other areas.

“Consequently, the overall outcome has been characterized by low-to-moderate cost escalation rather than substantial cost reductions,” says the report.

Construction demand continues to be bolstered by such factors as significant infrastructure spending, housing shortages and the “robust” population growth. Meanwhile, moderating equipment and materials costs are counteracting other price increases.

“As we navigate this phase of relative stability in construction costs, it is crucial for building development and construction companies to stay agile and well-informed,” says Toronto-based Altus in the report.