The annual Altus Group’s Canadian Cost Guide 2022, tracking hard construction costs across Canada, has been released and it shows a sharp increase in costs in 2021 compared to 2020.
Altus cites a combination of high demand, rising prices for building materials, a persistent labour shortage and broken supply chains for the creation of a “perfect storm of rising costs.”
Consider the challenges the residential construction industry has faced some may consider it a wonder that prices did not rise even higher.
According to the Canadian Cost Guide 2022, total residential spending in 2021 reached $126 billion, up from $114 billion a year earlier.
The costs compared in the guide are hard construction costs, drawn from 1,995 residential project in 2021. The prices are based on the cost per square foot and do not include land costs, soft costs such as marketing and design, landscaping, or financing, legal or municipal fees, which vary widely across Canada.
The Homebuilders Association of Vancouver (HAVAN) released a report January 31 that estimates that local land values account for 38.1% 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%, 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.
The following comparisons are for a single-family detached house with no basement and the cost to custom build a detached house in Canada’s three largest markets.
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%, 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% from 2020, while the cost to build a custom home increased 11.1% in 2021 from a year earlier.
For the complete 2022 construction cost guide, which details single-family and multi-family construction costs in nine Canadian cities, contact Altus Group at www.altusgroup.com.