Despite the recent volatility in the Vancouver housing market, affordability challenges persist. There are certainly hopes that the record 45,000 units currently under construction in Metro Vancouver should provide some relief in the near future.
However, the reality is, the cost of construction and government taxes remain a barrier, perhaps artificially putting a floor under new home prices in the long run- unless the cost of construction which includes labour, materials, and government taxes decline significantly. Possible, but unlikely.
A new report from Altus Group suggests Vancouver construction hard costs are the highest in the country. Hard costs include expenses directly related to the physical construction of a building. As you can see in the chart below, condo construction hard costs start at $220/sqft for concrete construction.
Keep in mind this doesn’t include soft costs. Soft costs include items such as architectural fees, legal fees, re-zoning costs, community contributions, Government taxes, financing costs, and more. This can range anywhere from an additional $100-$200/ sqft across Metro Vancouver.
In other words, to build a low/mid rise concrete condo in Vancouver, you could be looking at all in building costs of $500/sqft. Now throw in the cost of land, currently sitting at an average price per square foot of $230 and you can see how we got here.