If you’ve wondered how much it costs to build a house in Canada, you’re not alone. While housing supply has improved across many Canadian real estate markets, inventory is still far below the historical averages in major urban centres, suburbs, and rural communities.
Is purchasing a resale residential property or buying bare land and building a home from scratch easier and more affordable? There are many advantages to constructing a single-family home from the ground up, including the opportunity to customize the space to fit your lifestyle. Room by room, you have the final say on the layout, features, and finishings. On top of all that, there is the thrill of watching the project come together.
How Much Does It Cost to Build a House in Canada?
Building a home comes with many benefits and headaches, if we’re being perfectly honest. Over the last few years, the main challenges have been the growing costs associated with labour, raw materials, and overall construction. From supply chain problems to labour shortages, creating a detached property is becoming increasingly expensive. The estimates vary, but the average price to construct a single-family house in Canada currently ranges from $100 to $300 per square foot. Of course, this estimate could be higher or lower depending on the type of house you build and where you live.
How Much Does It Cost to Build a House in Major Canadian Cities?
So, how much does it cost to build a house in major Canadian cities anyway? There is some data to provide prospective homeowners with rough estimates. According to the Altus Group’s 2023 Canadian Cost Guide, the price per square foot for a detached home in Canada’s major urban centres has risen in recent years.
Here’s a breakdown of cost per square foot based on single-family residential units with unfinished basements:
- Vancouver, British Columbia: $185 to $315
- Calgary, Alberta: $150 to $240
- Edmonton, Alberta: $150 to $140
- Winnipeg, Manitoba: $145 to $230
- Toronto, Ontario: $205 to $280
- Ottawa, Ontario: $140 to $225
- Montreal, Quebec: $140 to $205
- Halifax, Nova Scotia: $105 to $165
- John’s, New Brunswick: $130 to $165
“The Canadian construction and development industry hit major turbulence in 2022. The combination of widespread supply chain disruptions, sustained cost escalation, and rapidly rising interest rates strained budgets of builders, developers, and governments alike,” the Altus Group report stated.
In 2023 and looking ahead to 2024, “there is reason for cautious optimism,” the authors noted.
“Underpinned by higher immigration, increased immigration targets and a large backlog of projects underway, demand is likely to remain strong in the year ahead, even with a mild recession. In addition, supply chain snarls, and inflation appear to be at, or nearing, an inflection point, potentially opening the door to less construction cost volatility in the year ahead.”
But others are not quick to share that same level of optimism.
In a new report by the Canadian Centre for Policy Alternatives, Canada’s housing market is constructing fewer homes today than during the pandemic-era lockdowns in 2020, citing inflation and the high cost of materials.
In July, investment in new single-family homes slowed 21% from the level in April 2020. Moreover, new row homes fell by 8%, and new apartment and condominium construction slipped by 2%.
“The Bank of Canada estimates that the worst impacts of rate increases take two years to hit the housing sector, and the housing sector is the main vehicle for rate hikes to hit the economy,” said David Macdonald, senior economist and report author. “Right now, it has been 18 months since the first rate increases, but most of the bigger rate increases have occurred in the past 12 months — so the worst is yet to come.”
The organization explained that the regulatory hurdles and the length of time between the initial planning stage and new builds coming to market (five to ten years) would cause residential properties to take more time to come to market.
Can I Get a Loan to Build a House?
There are Home Construction and Self-Build Mortgages available when building a house. However, your first consideration is buying a piece of land. Vacant land is an unsecured asset, so your loan typically comes with higher interest rates than a traditional mortgage. Additionally, you’re generally expected to have a larger down payment, ranging between 25% and 30% of the purchase price of the land.
These vary in interest rates and terms from lender to lender.
There are two types of construction mortgages:
- Completion mortgage: In this case, the mortgage loan isn’t transferred until construction is complete.
- Draw or a progress-draw mortgage: In this type of mortgage loan, the builder draws money in increments as the home is built.
These loans are more complicated than a typical mortgage. Speak to a mortgage broker or your bank to discuss your options to make the right financial decision based on your needs.
How Long Does It Take to Build a House?
When labour shortages and supply chain snafus are removed from the equation, it takes 10 to 16 months to build a house, assuming everything goes as planned. That doesn’t include clearing the land or tearing down an existing home. It also does not consider the many issues that can arise, from bad weather and delays in material deliveries to the extra time that can add up from delayed decision-making.
How to Reduce the Cost of Building a House?
While many things are out of your control in the average house build, there are various ways you can save on overall costs.
Here are some pro tips on how to save money on your build:
Land and Location
Location is an essential consideration in the home-building process. Generally, the further away your land is from a major city, the lower your price tag. But be careful – what you save on price could be eaten up by the cost of connecting to sewage systems, water, gas, hydro lines, and telecom towers that are miles away. If there are no nearby connection hubs, you may be forced to install your own services or consider alternatives such as a solar and battery storage solution for power, a bore well for water, and a septic system for waste containment.
You’ll also need to consider the slope of the land, the number of trees you might have to clear and any exposure you might have to environmental hazards like floods, fires, earthquakes, tornadoes, hurricanes, hail and snow. While grading and tree clearance are added costs you could save by choosing more suitable land, the cost of insuring a house built with substantial environmental liabilities could be a deal breaker – if you can get insurance for your home at all.
Get Final Quotes for Comparison
Ensure you get project quotes from several contractors. Keep in mind that the cheapest builder is not always the best. There’s often a reason that a contractor is coming in low, possibly because they constantly miss deadlines or cut corners on quality. Do your research and only accept quotes from contractors with experience building the type of home you want in your chosen location. Regional expertise and outstanding references, reviews and ratings are also a must.
When you receive your “all-inclusive” quote (versus a non-binding bid or estimate), make sure you understand what’s included and what’s not.
For example, does it include:
-
- The application for permits and other required municipal or government paperwork
- Labour AND materials
- GST/HST on labour and materials
- Engineer drawings
- Scaffolding
- Demolition of current structures on the land
- Waste and recycled materials removal during and at the conclusion of the build
- Disconnection and connection services for utilities and services
- A topographical survey
- Site works including compaction of disturbed or unstable soil; rock removal; extra reinforcements required for building over a sewer or stormwater pipes; creation of drain fields or retaining walls; removal of trees; etc.
- HVAC systems and water heaters
- Painted interiors and exteriors
- Installation of interior and exterior light fixtures
- Cabinetry, closets and doors (including door locks and handles) for every room
- Window dressing and flooring
- Fireplaces
- Decks, fencing, driveways and landscaping
- Pool construction, including filtration and drainage equipment installation
Making the wrong assumption about any or all of the above could blow your carefully crafted construction budget out of the water and leave you on the hook for tens of thousands of dollars, so have a lawyer familiar with new home construction go over your preferred quote with a fine-tooth comb before you sign it.
And even if your general contractor includes the pool, fireplace, driveway or landscaping in their quote, you might want to compare it with a separate quote from a contractor who’s an expert in a particular trade, as you might get better work and a better deal from a specialist.
Choose Existing Home Designs
Choosing a pre-existing design over a completely custom design is far more affordable when it comes to new builds. Consider going with pre-designed choices from a library of plans an experienced home builder might offer.
Define Your Budget
Set a realistic budget by considering what you need in your home and what you can afford. Give yourself some wiggle room to avoid strain on your financial situation. Once you get estimates, you can see if there’s a possibility of an upgrade in square footage, the number of bathrooms, etc., that you can secure within the final quote.
Consider Lifestyle
Your lifestyle will play an important role in what you need from a home. Are you planning on having a family? Do you often have out-of-town guests? Do you work from home? Do you exercise at home? Do you love cooking? How many cars do you have? How much storage space do you need to accommodate your hobbies? These questions will help you determine where you need to invest extra money and where you can save.
Save on Aesthetics
Your home style will impact both its cost now and its resale value later. If you’re not married to a particular style, consider going with a mid-century modern, farm style or craftsman style, as all allow you to get away with lower costs on the interior finishes without sacrificing the look of your home for resale purposes. For example, though you’ll sacrifice some aesthetic value, drywall will look good in all the above styles and is far more affordable than walls made with exposed brick or wood panelling.
Lend a Hand
Significant savings on labour costs can be found by doing some of the work yourself. Some of the easiest things to take on are painting and installing light fixtures. Handier people will often install their flooring or kitchen cabinets once all the plumbing and drywall are complete.
Reclaim and Recycle
Reclaimed and recycled timber, steel and brick are eco-friendly, add character and can save you a lot of money. There are also many salvage yards, shops and charitable organizations like Habitat for Humanity Restore, where you can hunt for everything from doors and windows to kitchen cabinets and sinks.
Are There Other Options to Custom-Built Homes?
Subdivision New Builds
If you’re looking for a new home but don’t have the time, energy, or money to invest in a new home build, there’s always the new-build route in a subdivision. You get a new house without having to organize contractors and tradespeople, and there is typically an option that allows you to upgrade everything from floors, countertops, tile and cabinetry to lighting and appliances, plus kitchen and bathroom fixtures.
Small or Tiny Houses
How much does it cost to build a small house? How much does it cost to build a tiny house? It all depends on who’s creating the definitions. According to a 2017 report by Statista Research Department, the average size of a Canadian home is 1,792 square feet. A small home is typically under 1,000 square feet, while a tiny home measures around 400 square feet or less and can be purchased or built for less than $200,000.
How Much Does It Cost to Build a House?
Although building a home can prove affordable, in Canada, as in other countries, it also comes with its fair share of challenges. Be sure to plan and educate yourself on the building process.
