Surging construction costs in Canada are putting immense pressure on home prices, exacerbating the already severe affordability crunch, according to the country’s largest lender. A gauge of residential construction prices has surged by 51% since the first quarter of 2020, far outpacing the 13% gain for the consumer price index, as reported by Royal Bank of Canada economists in a recent publication.
“The cost of building a home in Canada – or any structure for that matter – has never been higher,” the economists stated, highlighting the “dramatic jumps” in concrete and structural steel prices since the pandemic’s onset, along with soaring lumber prices in 2021 and early 2022.
These escalating construction costs are adding to the challenges of high home prices, rents, a surge in immigration-driven population, and shortages of workers and raw materials, all of which are contributing to the difficulties faced by homebuyers.
The increase in building costs has also led to a decline in new home construction in recent quarters, which poses a problem considering the accelerated population growth.
RBC economists noted that labour costs have soared amid high job vacancy rates in the building industry, with wage growth in construction exceeding 9.4% last year, more than double the pace of other industries. To tame inflation, the report suggested that increasing the supply of skilled workers through federal government programs designed to attract skilled immigrants might be a viable solution to ease labor shortages in the construction sector.
Picture source: Canva
Extreme weather conditions have also impacted the availability of critical building materials, driving prices up. Heavy rains, floods, and wildfires have constrained lumber supply, while temporary shutdowns of cement plants in Ontario, BC, and Alberta have hindered production.
While some relief is expected in the near-term due to a lull in homebuilding and the resolution of production issues at cement plants, the report anticipates that significantly ramping up homebuilding over the medium to longer term will keep construction costs elevated.
In conclusion, the housing market in Canada faces considerable challenges due to surging construction costs, labor shortages, extreme weather impacts, and a rapidly growing population. Finding sustainable solutions to these issues is crucial for ensuring long-term housing affordability and stability in the country.
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June 2023 revised concept of the Jericho Lands. (MST Development Corporation/Canada Lands Company)
The Indigenous-led project, spearheaded by the MST Development Corporation and Canada Lands Company, now envisions 13,000 homes for up to 24,000 residents, with an increased total building floor area of 13.6 million sq ft. This development is larger in scale than the Squamish First Nation’s Senakw project and has the potential to double the population of the entire West Point Grey neighborhood.
The 90-acre site, previously a military installation, is bordered by West 4th Avenue, Highbury Street, West 8th Avenue, and Trimble Park. Unlike Senakw, Jericho Lands is not on reserve land and is subject to the City of Vancouver’s policies and processes. The project is currently in the drafting stage of a master plan, which will guide future rezoning applications over a span of 20 to 30 years.
To ensure long-term land ownership, the three First Nations involved have decided to limit homeownership opportunities to leasehold strata, making housing relatively more affordable compared to a conventional freehold housing. The revised concept also includes a commitment to affordable housing, with at least 30% of the residential building floor area designated for social and secured rental housing.
The new concept introduces approximately 30 high-rise towers, including three 49-storey towers called the “Sentinels,” representing each of the three First Nations. The project also features low- and mid-rise buildings, with around half of the structures utilizing wood construction for sustainability purposes.
The development aims to prioritize pedestrian and cyclist pathways, with over 13 km of pathways aligned with the site’s hillside topography. The plan allocates 33% of the land area, or approximately 30 acres, to parks, open spaces, and recreational areas. Notable features include the preservation and enhancement of existing forests, the uncovering and restoration of buried streams, and the construction of a gathering place called “Watchmen’s Hill” at the top of the ridge.
Land use map; June 2023 revised concept of the Jericho Lands. (MST Development Corporation/Canada Lands Company)
Community facilities, such as a new community center, public elementary school, childcare facilities, and First Nations cultural spaces, are planned to serve the new population. The proponents are also engaging in discussions with West Point Grey Academy, exploring the possibility of the independent school remaining on-site within new buildings.
The final design of the buildings, open spaces, and public amenities will be determined in the later stages of the City’s policy statement, with City Council expected to review the master plan in Fall 2023. Public feedback is being sought through an online survey until July 16, 2023.
An artists’ rendering of the future neighbourhood at ʔəy҆alməxʷ/Iy҆álmexw/Jericho Lands – final design of buildings, parks and open spaces to be determined in future phases of the planning process following the Policy Statement.(MST Development Corporation/Canada Lands Company)
The project represents an opportunity for the First Nations involved to assert their land ownership and economic leadership while showcasing their culture. It is seen as a step toward creating modern Indigenous communities that welcome all residents and visitors. MST Development Corporation and Canada Lands Company have also partnered for the Heather Lands project, another significant redevelopment endeavor in Vancouver.
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