Cost of Building a Home in Canada Has Never Been Higher

According to an article by Ontario Construction News (7-10-23), the cost of building a home in Canada has never been higher. This is the conclusion of an industry costs report released by the Royal Bank of Canada (RBC) the week of July 3rd.

The report notes that since the start of the COVID-19 pandemic in Canada, costs are up 51%. Canada’s construction price index has well outpaced the Consumer Price Index by 13%. Driving the increase are substantial jumps in prices for key building materials like concrete, up 55%, and structural steel, up 53%, since 2020Q1. Soaring lumber prices in 2021 and early 2022 also contributed to higher building costs but have since retreated.

The increase in raw material prices, together with a growing population, has accelerated increases in the development fees and levies imposed by municipal governments. These fast-growing fees—which increased as much as 30% annually last year for single or semi-detached units—are indexed to Statistics Canada’s Construction Cost Index. However, the report does note that the increased fees are intended to fund the growth component of municipal capital projects, as high levels of expected population growth, alongside inflation, have contributed to the rapid acceleration of these fees.

The report also singles out the lack of skilled tradespeople as another cause for the rising cost of building.