Canadian quantity surveyors say they’re hopeful infrastructure investments will continue as a linchpin of the construction economy over the next year but they expect the residential sector to continue to stagnate.
The results of the Q2 2025 RICS-CIQS Canada Construction Monitor highlighted the caution felt by the construction cost professionals in the face of increased trade tariffs set by the United States.
The report stated rising material costs remains a key challenge for the construction industry, with RICS-CIQS members forecasting cost inflation of nearly five per cent over the next 12 months, potentially hamstringing any prospects of a robust resurgence in the sector.
The RICS (Royal Institution of Chartered Surveyors) survey of Canadian quantity surveyors, members of the CIQS (Canadian Institute of Quantity Surveyors), was released earlier this month. The survey received 138 responses.
U.K.-based RICS chief economist Simon Rubinsohn said member feedback before the launch of the Donald Trump era in January was relatively positive looking ahead to this year but the Q1 and Q2 2025 reports clearly indicate Canadian quantity surveyors are “understandably” concerned about how the new U.S.-Canada relationship will work.
“When we talk about the current environment, I suspect this is more than anything a sentiment of fear about how things might unfold and some of the challenges they might experience” said Rubinsohn. “And we know some of those are being felt in terms of costings.”
Subdued macro outlook
The macroeconomic outlook for the next 12 months in Canada is subdued, the economist remarked, creating an environment where speculative developers are not going to be aggressive “in terms of pulling the levers to push projects ahead.”
One Vancouver-based respondent commented for the report, “Cost of financing, increasing development fees, increases in construction costs and reductions in property values are negatively impacting our ability to bring projects to market.”
Respondents noted a strong rebound across infrastructure compared to the previous survey period.
A net balance of plus 40 per cent of contributors saw a pick-up in such workloads during Q2, the strongest reading going back to early 2023.
The social infrastructure sub-sector recorded the most notable uptick, with water and waste as well as transport seeing a marked improvement.
But the indicator tracking private residential activity slipped deeper into negative territory, registering a net balance of minus 34 per cent. It’s the weakest reading across the sector since the survey was created in 2019.
“When I think about housing markets more generally, what actually provides impetus for them, you generally need a decent enough macro environment, so growth leading to rising employment and wage growth, or you need interest rates cut, and ideally both,” said Rubinsohn.
Referring to potential interest rate cuts by the central bank, Rubinsohn suggested there might not be much scope for further sustained reductions.
“Against that background, I would be surprised if the housing market were to do anything than to remain pretty flat from here on, and with a downside bias.”
The survey also identifies a credit crunch as affecting the residential market.
“As we move through the cycle, we would expect to see the economy regain some traction,” said Rubinsohn. “If it does do that, that will provide the basis perhaps for something of a recovery in the market.”
With respect to private non-residential/commercial development activity, the latest net balance of negative six per cent is a little less unfavourable than minus 18 in Q1.
Focus on skills
Other indicators with improvements were employment and profit margins.
Rubinsohn said long-term strength across the sector will not be achieved without workforce growth.
“In terms of thinking about capacity for the future, the messaging around skills is still an important one. I know a lot is being done in Canada. It’s an ongoing conversation. There are a lot of initiatives.”
Rubinsohn suggested surveys monitoring the confidence of quantity surveyors offer unique insights into costs and risk, given those professionals are generally involved in projects at an early stage.
“They will also be more engaged with some of the core numbers around the development as well, and I think that that gives us a slightly different perspective.”
