How Much Does it Cost to Build a House?

Everything you need to know about construction costs.

By Emily Southey | 13 minute read

Have you decided to build your own house instead of buying an existing one and are wondering how much it will cost? Look no further! We break down the average costs of building a house in Canada, as well as which factors impact the cost of home construction and how to get an estimate for a custom-built house.

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The Average Cost of Building a House in Canada

The average cost of building a house in Canada varies greatly. For example, building a home in Vancouver (one of the country’s most expensive cities) likely won’t cost the same as building a home in a smaller city like Halifax or Winnipeg. Beyond the location, the size and type of home you buy directly impact the cost, with larger homes typically costing more than smaller homes. Similarly, production single-family homes (derived from stock home plans) are often cheaper to build than custom homes. Since there are so many factors that determine house-building costs in Canada, we’ve broken down the average build costs per square foot by Canadian city.

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Average single-family home-building costs by city (per square foot)

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• Toronto: $400–$900
• Vancouver: $430–$1,090
• Calgary: $405–$860
• Edmonton: $405–$860
• Ottawa: $435–$910
• Montreal: $390–$800
• Winnipeg: $410–$860
• Halifax: $250–$500

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Seven Factors That Impact the Cost of Building a House in Ontario

As you can see from the list above, average home-building costs vary widely, even within the same city. Why is this the case? Because the location is just one factor impacting the cost of building a house. Some of the other factors affecting costs are outlined below.

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Square footage, design, and format

The square footage of the house you wish to build is one of the top factors influencing the cost of construction. The cost of building a home is often calculated according to square footage. Therefore, the greater your square footage, the more your house will cost. In addition, the design and format of your home can also influence the cost, with multi-storey homes typically costing more than single-storey properties. Modern or technological design elements can also drive the cost up.

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Building permits and inspections

The price of obtaining building permits and conducting inspections can increase the overall cost of building a home in Ontario. For example, before you can begin construction, you need to apply for the necessary building permits. Permits are just one type of regulation that you might need to comply with. Depending on the municipality, an inspection may also be required. There might even be an overall safety rating you have to meet or specific building materials you are limited to buying, all of which can impact the cost of building a home.

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Building company

The cost of hiring a builder varies in Canada, with each building company charging different rates. As a rule of thumb, rural areas or small cities tend to offer the lowest construction rates. However, in major cities like Toronto and the Greater Toronto Area (GTA), you can expect the cost of hiring a builder to be significantly more.

Construction materials

Not all homes are made of the same materials, and some materials cost more than others to procure. Plus, the cost of materials fluctuates. For example, there has been a lumber shortage due to the COVID-19 pandemic, resulting in the cost of lumber skyrocketing. Custom-built homes may also require specialized materials, further impacting the overall cost of construction.

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Financing

Most Canadians will need to obtain financing in order to build a new house. Mortgages are already expensive but land loans are even more so. Since building your own home is seen as a riskier investment, your interest rates might be high and your lender may require you to make a larger down payment. Plus, in addition to the land loan, you may also need to obtain a construction loan to help you finance the actual building process. Having to take out multiple loans can quickly increase the cost of your project. Plus, once construction is complete, homeowners will still need to take out a traditional mortgage.

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Current state of the land

If you’re buying land in Ontario, the state of it is the first thing you should examine, as the current state of the land can have a major impact on the cost of building your new house. Whether you want to buy vacant land, raw land, or Crown land, you will need to find out how much work needs to be done to bring your home to life. If there are no permanent structures already on the land (as is usually the case with raw and vacant land), plot preparation will need to be factored into the building costs. Plot preparation involves excavation and construction machinery. Therefore, the emptier the land, the more expensive it will be to build your new home.

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Land location

Beyond the state of the land, the location of the plot can have a huge effect on the price of building a new home. Land is usually cheaper to buy in rural areas than it is in suburbs or cities, and there is more of it, giving homebuyers greater options. Metropolitan areas also tend to have stricter regulations, leading to higher costs.

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How to Get An Estimate for a Custom-Built House

Now that you know the average cost of building a house per square foot and the key factors influencing the cost of home building in Canada, you might be interested in receiving a quote for your project. Luckily, there are a couple of different ways to obtain a rough estimate of how much your home will cost. Check them out below.

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Method #1: Use a construction cost calculator

One of the quickest and most convenient ways to obtain a home-building quote is with a construction cost calculator. A simple Google search will reveal an array of free cost calculators. While not as accurate as method #2, these tools are a great first step as they provide a rough estimation of how much building your dream home will cost.

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Method #2: Contact a builder for a quote

For a more accurate estimate, we recommend contacting a builder (or multiple builders) near you for a quote. Builders are experts in their field and have extensive knowledge of the local market. They will also take more specific details into account when calculating the cost, such as the layout, size, desired features, project site, and local regulations and permits. When requesting a quote, be sure to provide as much information as possible about the project. It’s also a good idea to ask the builder what costs aren’t included in the quote, as components like driveways, fencing, or landscaping may not be incorporated. Most builders provide obligation-free quotes, which means you won’t be obligated to proceed with your project should you change your mind about building a home if the estimate is beyond what you can afford.

Hiring a Builder for Your Home

Hiring a builder is one of the most important steps in building a new home. Therefore, this decision shouldn’t be rushed. Rather, you should interview multiple candidates, do your research, and carefully consider who you want to execute your project. Look up the completion rates of the builders you’re considering, compare the costs of each, and find out if they specialize in building a certain type of home. For example, some builders specialize in production homes while others specialize in custom-builds. Choose one that aligns with your project.

When interviewing prospective builders, we recommend asking the following questions to help you gauge whether they’re the right fit for you:

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• Are you licensed and insured?
• What is your building process?
• What type of homes do you specialize in building?
• Are you able to build a home that suits my property layout?
• Do you offer regular updates on the progress of the project? What is your preferred communication method?
• What is your average timeline for completing a project similar to mine?
• Are your designs and plans flexible?
• Do you have any recently completed homes that I can see?
• Can you provide a few references?

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Tips to Save Money When Building a New House

The cost of building a new house can be high, but there are ways to save money. Check out our top tips for saving money when building a new house in Canada.

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Compare bids

Though price is just one factor that should go into choosing a builder, we recognize it’s an important one. Therefore, we recommend taking bids from multiple builders and comparing them. You have every right to interview multiple builder candidates (as mentioned above), and requesting a project estimate from each can give you an idea of cost. Comparing costs and choosing a builder with a lower price point can save you money on your project (just make sure the lower cost isn’t indicative of quality).

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Choose a production home over a custom-built home

Building a new house according to an existing house design typically costs less than building a custom property. This is because when you custom-build a home, you need to hire an architect to design it for you. But when you buy a production home, a design has already been created. Plus, choosing a product home over a custom-built one can help you avoid unexpected costs that often come with customizations, such as special materials.

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Build a smaller home

This might sound obvious, but building a smaller home is one way to save money. Reducing the square footage of the property translates to fewer materials and a shorter time frame, instantly minimizing costs.

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Prioritize functionality over esthetics

Esthetic elements, while they look nice, can significantly increase the cost of building your home. For example, window sills made from luxury materials are far more expensive than generic window sills but do not increase functionality. Similarly, drywall is much cheaper than wood or cedar panelling. To reduce how much you spend on your new home, opt for functional upgrades over esthetically pleasing ones.