Ontario Construction News staff writer
Altus Group’s annual Canadian Cost Guide 2022, tracking hard construction costs across Canada, shows a sharp increase in costs in 2021 compared to 2020.
Citing extremely high demand, increased prices for building materials, a labour shortage and broken supply chains, the report says the construction industry is faced with a “perfect storm of rising costs.”
Total residential spending in 2021 reached $126 billion, up from $114 billion a year earlier.
The report concludes the “Canadian construction industry demonstrated remarkable resilience in 2021, with construction activity in many cities reaching or exceeding pre-pandemic levels. Although robust construction demand is generally welcomed news, it also compounded the cost pressures experienced over the past year.”
In a Jan. 31 report, the Homebuilders’ Association of Vancouver (HAVAN) estimates local land values account for 38.1 per cent of the average cost of a new Metro Vancouver detached house, which sells for $1.75 million. Municipal fees and taxes make up an average of 10.9 per cent, or $191,400, of a new house price.
HAVAN cost estimates are based on data as of December 31, 2021, building a 2,600 square foot single-family detached home over 12 months, to B.C.’s building code.
In Metro Vancouver, the cost to build a standard, no-basement detached house in 2021 ranged from $150 per square foot to $275 per square foot. For a Metro Vancouver custom house, the price range was from $450 to $1,135 per square foot, according to Altus.
HAVAN says the construction costs contribute nearly 30 per cent, or $520,000, to the average sale price of a typical detached house in Metro Vancouver.
In the Greater Toronto Area (GTA), the cost to build a standard, no-basement detached house in 2021 ranged from $165 per square foot to $260 per square foot. For a GTA custom house, the price range was from $480 to $1,050 per square foot.
In Montreal, the cost to build a standard, no-basement detached house in 2021 ranged from $130 per square foot to $190 per square foot. For a Montreal custom house, the price range was from $400 to $800 per square foot.
On average, the price to construct a standard detached house in these three centres was up 3.4 per cent from 2020, while the cost to build a custom home increased 11.1 per cent in 2021 from a year earlier.
“There are many means to increase supply but introducing more flexible and innovative zoning regulations is essential to alter the status quo and provide for a broader range of choice and availability,” said Ron Rapp, HAVAN CEO
Streamlining and expediting zoning/development, and not fragmenting approvals on a lot by lot, project by project basis can reduce approval processes by municipalities by many months, he suggested, adding “pre-zoning” vs “re-zoning” can contribute to stabilizing land value and reduce financing and operating costs that trickle down.