FCM estimates $107,000 in infrastructure costs for every new home built
Housing affordability has become a critical concern amid Canada’s population growth. The Canada Mortgage and Housing Corporation (CMHC) projects a need for 5.8 million new housing units by 2030 to accommodate the projected growth of Canada’s current population. However, building new homes requires essential foundational infrastructure that supports their construction.
New research commissioned by the Federation of Canadian Municipalities has found that, on average across Canada, the cost of municipal infrastructure required to support new housing construction is $107,000 per home.
The average cost per new home was determined by dividing the total replacement value1 of municipally owned infrastructure by the number of private dwelling units in Q2 2020. The average unit cost has been adjusted to 2023 prices by using the Building Construction Price Index, reflecting the impact of inflation in construction to determine the investment required per home. This process is performed for each asset class, which are then tallied up to derive the average cost of municipal infrastructure needed for constructing a new home [Annex: Table 1].
According to the CMHC estimated need for 5.8 million new homes, this would represent approximately $600 billion in local infrastructure investment. Importantly, emergency services, civic buildings, health and education assets, information technology, and electrical utility infrastructure are not factored into the calculations. If included, these assets would further raise the average cost of required municipal infrastructure per new home built.
The announcement made during the Fall Economic Statement to leverage the Canada Infrastructure Bank to support more housing finally recognizes that more homes cannot be built without the essential housing-enabling infrastructure to support it – a position the industry has repeatedly emphasized to all orders of government.
Understanding the infrastructure requirements for new housing construction is fundamental to meet the increasing housing needs of Canada’s growing population. Yet, details regarding investments in public infrastructure remain absent. The Canadian construction industry looks forward to a comprehensive long-term infrastructure investment plan as it continues to partner with government to build a strong foundation for a stronger Canada.
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1 The approximate cost at the present time (in current dollars) that would be required to replace the assets owned or leased by an organization,
including demolition costs. Excludes land and overhead (administration) costs.