If you’ve wondered how much it costs to build a house in Canada, you’re not alone. While housing supply has improved across the Canadian real estate markets, inventory is still far below the historical averages in many major urban centres, suburbs, and rural communities. Is it easier and more affordable to purchase a resale residential property or buy bare land and build a home from scratch? Indeed, there are many advantages to constructing a single-family home from the ground up, considering that a large swathe of homeowners are not selling their houses to endure higher interest rates. You have 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 some headaches, if we’re being perfectly honest. Over the last few years, one of the challenges in the Canadian real estate market has been the growing costs associated with labour, raw materials, and overall construction. Everything from supply chain problems to labour shortages, creating a detached property is becoming increasingly more expensive. The estimates vary, but the average price to construct a single-family house in Canada will range from $100 to $300 per square foot. Of course, it does depend on 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 is a breakdown 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,” 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 percent from the level in April 2020. Moreover, new row homes fell by eight percent, and new apartment and condominium construction slipped by two percent.
“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) will 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%.
These vary in interest rates and terms from lender to lender.
There are two types of construction mortgages:
Completion mortgage: In this case, the loan isn’t transferred until construction is complete.
Draw or a progress-draw mortgage: 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?
Time is tricky to call as there are so many working parts. Add in the decreased predictability that the pandemic brought, complicating matters further. However, on average, it takes from 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 to lack of human resources and delays in materials to challenges with you being able to make decisions promptly.
How to Reduce the Cost of Building a House?
The best thing about building a house is that you can control the budget to save on overall costs – or at least try. Here are some pro tips on how you can save money:
Land and Location
Where you build is an essential consideration in the home-building process. If you are able, the further you purchase from a major city, typically you will find a lower price tag. Also, consider the slope of the land and the number of trees you have to clear. Grading and tree clearance are added costs you could save by choosing suitable land.
Consider several contractors to bid on the project. 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 sacrifice deadlines or cut corners on quality. Do your research and make sure you approach contractors with experience in your region and outstanding reviews and ratings. Ensure you get comprehensive quotes, including fencing, driveways, landscaping, and other exterior elements.
Choose Existing Home Designs
Getting a preexisting design over a completely custom design is far more affordable. Consider going with pre-designed choices from a library of plans an experienced home builder offers.
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.
Your lifestyle will play a role in what you need from your home. Are you planning on having a family? Do you often have out-of-town guests? Do you work from home? Do you work out 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 help you determine where you need to invest extra money and where you can save.
Save on Aesthetics
The style of home you choose will impact the cost significantly. If you’re not married to a particular style, consider going industrial or rustic, as these looks are more forgiving. You can get away with lower costs on the interior finishes without sacrificing the look of your home. For example, drywall is far more affordable than pine or cedar panelling, though you sacrifice some aesthetic value.
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.
Though it takes a little more time, get quotes from multiple trades on each aspect of the home. There are some areas where you might get better deals than your contractor can give. Those can include HVAC systems and water heaters, so don’t be afraid to tell your contractor you want to shop around.
Reclaim and Recycle
There’s a lot to be said for reclaimed and recycled items. They are eco-friendly, add character, and can save a lot of money. There are many salvage yards and 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?
If you are 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. If there are features that you want in the home, there is typically an option to upgrade for a more customized look or features.
Although building a home can prove affordable, it also comes with its fair share of challenges. Be sure to plan and educate yourself on the building process.