Homebuilding costs in Canada soar 51% as population surges
‘The cost of building a home in Canada … has never been higher’
Surging construction costs in Canada are putting new pressure on home prices, worsening a severe affordability crunch, according to the nation’s largest lender.
A gauge of residential construction prices has risen 51 per cent since the first quarter of 2020, outpacing the 13 per cent gain for the consumer price index, Royal Bank of Canada economists said in a report published Wednesday.
“The cost of building a home in Canada — or any structure for that matter — has never been higher,” the economists said in the report, citing “dramatic jumps” in concrete and structural steel prices since the start of the pandemic along with soaring lumber prices in 2021 and early 2022.
The increase in building costs comes as Canada grapples with high home prices and rents, an immigration-driven population boom, and shortages of workers and raw materials — all of which are adding to homebuying challenges.
The elevated costs have contributed to a decline in new home construction in the past two quarters. That’s a problem because population growth is accelerating.
