New house construction costs

The BC Real Estate Association (BCREA) reported in January that residential unit sales were up almost 33% in 2021 over 2020. The average residential price had climbed to $927,877 – a humungous 18.7% jump over the previous year.

It was a record year for British Columbia’s house market with seven areas setting new highs. Listings could not keep up with demand throughout the year. And as it happens, we start 2022 with the lowest level of active listings on record.

Another not surprising stat according to the Canadian Cost Guide 2022 is the total residential spending in 2021 reached $126 billion, again up from $114 billion a year earlier.

A January 31st report by the Homebuilders Association of Vancouver estimates that local land values account for 38.1% of the average cost of a new Metro Vancouver detached house priced at $1.75 million. Municipal fees and taxes make up an average of 10.9%, or $191,400.

According to Altus Group, the cost to build a standard, no-basement detached house in Metro Vancouver in 2021 ranged from $150 per square foot to $275 per square foot.  The pricing for a custom build house would start closer to $450 per square foot.

Comparison costs of building a new house in Canada

• Vancouver: $145 – $265
• Calgary: $125 – $195
• Edmonton: $125 – $195
• Winnipeg: $120 – $185
• Greater Toronto Area: $140 – $240
• Ottawa: $120 – $200
• Montreal: $105 – $175
• Halifax: $90 – $150
• St. John’s: $115 – $150

The construction costs across the board have skyrocketed because of material shortages and shipping delays due to the pandemic. More than 90% of builders are reporting shortages of essential elements like appliances, framing lumber, and oriented strand boards.

Build your own house

More home buyers than ever are considering building their own homes. Many different factors influence the overall cost of your custom home. Here are some things that will be included in your construction cost:

• Labour costs (home builders, equipment rental, etc.)
• Municipal services (e.g., water, gas, electricity, heat, and air conditioning)
• Materials for your structure (e.g., wood, concrete for your foundation, pipes for plumbing, etc.)
• Interior design materials/fixtures (e.g., bathroom vanities, granite countertops, hardwood flooring, etc.)
• Services of a custom builder (i.e., engineers, architectures, interior design, etc.)
• Additional costs of any problems that arise

How to finance the construction of your new house

You will need a different loan to buy the vacant land, which will most likely come with higher interest rates than a traditional mortgage.

You will also be expected to have a larger down payment that can range between 25–30%. Your construction mortgage is then used to cover the building costs. 

There are two types of construction mortgages

1. Completion mortgage: The loan will be transferred after construction is complete.
2. Draw or a progress-draw mortgage: The builder draws money in increments as the home is built.

Speak to a mortgage broker or your bank to discuss your options so that you make the right choice for your needs.

Note: The building costs as outlined in these statistics do not include the following: the cost of house design (plans/engineering/etc. as require to submit to the city); the cost of landscaping/fencing/driveway and sidewalks; any additional service connections required by the municipality and options such as Air Conditioning, Fire Suppression systems, etc that might be outside of the scope.