The cost to buy a new single-detached home in Vancouver averaged nearly five times more than the cost to build it from 2018 to 2025, compared to two times more in Calgary, finds a new study published by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.

“The sale price of a home will usually exceed the cost to physically build it, but in some Canadian cities, that gap is significant which points to how other cost drivers—such as land value, government charges, and burdensome red tape—can exacerbate the housing affordability crisis,” said Austin Thompson, senior policy analyst at the Fraser Institute and co-author of The Gap Between Sale Prices and Construction Costs for New Homes in Canadian CMAs, 2018–2025.

The study finds that from 2018 to 2025, the gap between sale prices and building permit values (an estimate of the cost to physically construct a home) for new single-detached homes varied widely across Canada.

In Vancouver, new homes sold for 4.7 times more than their physical construction cost—by far the highest multiple in Canada. While Vancouver is an outlier on this measure, four of the five highest multiples were recorded in British Columbia. New homes in Victoria sold for 2.4 times their estimated construction cost, followed by Chilliwack (2.3 times), and Abbotsford-Mission (2.2 times).

Across Canadian cities, new homes sold for 1.7 times their estimated construction cost. Cities like Toronto (2.0 times), Calgary (1.9 times) and Ottawa (1.8 times) recorded multiples higher than the median. Meanwhile, cities such as Winnipeg (1.6 times), Halifax (1.6), and Montreal (1.5) were below the national median.

Crucially, the study notes that while home sale prices are generally expected to exceed hard construction costs, large and persistent differences between sale prices and construction values can reveal the extent to which factors beyond the physical cost of construction—including policies that restrict homebuilding opportunities and impose taxes and charges on new homes—can contribute to higher prices.

“In markets with significant gaps between home prices and construction costs, there is a strong case to closely examine how policy factors may be contributing to higher prices for Canadian homebuyers,” Thompson said.