Five ideas to address construction issues
July 28, 2022
Chris Atchison, president of the
BC Construction Association. | Submitted
Echoing and verifying what home builders have been saying for years, Canada Mortgage and Housing Corp. (CMHC) confirmed this month that government costs and fees add tens of thousands of dollars to the price of a new home.
According to a new joint CMHC and Altus Group Housing Market Insight report, Government Charges on Residential Development in Canada's Largest Metropolitan Areas, government fees impact the cost of new home construction by as much as 24 per cent.
The study examined the number and cost of government fees on six different new home development scenarios in select municipalities in Canada’s three largest metropolitan areas: Metro Vancouver, Greater Toronto Area (GTA), and Montreal.
According to the report, the average government charge per square foot for municipalities in the GTA is $86; in Vancouver, $70; and, in Montreal, $24.
In Vancouver, various charges account for 7to 20 per cent of construction costs.
Four years ago, private-sector studies done by the Greater Vancouver Board of Trade (GVBOT) and Toronto’s Building Industry and Land Development Association (BILD) revealed government costs accounted, on average, for 21 per cent of the price of a new detached house and 26 per cent of the price of a new condominium.
Both groups say the percentages are similar today, but all costs have increased.
Based on current new home prices and CMHC’s estimates, released July 20, government costs would add $420,000 to the cost of a new City of Vancouver detached house and more than $274,000 to a new condo price.
In the GTA, the City of Toronto generally has the highest government charges as a portion of total construction costs, according to CMHC. “If we were to remove government charges, the cost of a new dwelling would be 10 per cent to 24 per cent lower, depending on dwelling type. In the case of row homes, government charges represent about a quarter of the construction cost,” the study states.