The Impact of Rising Construction Costs on New Home Development in the Toronto Area

RIISE
Jun 19
2 min read

In the ever-evolving landscape of real estate, one factor is reshaping the trajectory of new housing development across the Greater Toronto Area (GTA): rising construction costs.

From the cost of raw materials to labour shortages and tightening regulations, developers are facing a complex equation that’s influencing everything from design decisions to market pricing.

🔨 What’s Driving the Increase in Construction Costs?

1. Material Prices The cost of essential building materials—like concrete, steel, lumber, and insulation—has risen sharply over the past few years. Factors include global supply chain disruptions, increased demand, and inflationary pressures.

Lumber prices surged during the pandemic and have remained volatile
Steel and concrete costs continue to rise due to energy prices and transportation
Specialty materials for sustainable or luxury builds add further premiums

2. Labour Shortages Canada’s skilled trades sector is facing a generational challenge. With many experienced workers retiring and fewer entering the trades, developers are experiencing delays and bidding wars for labour, pushing wages upward.

3. Regulatory Pressures As municipalities—including Toronto—raise environmental and safety standards, new housing projects must now meet stricter requirements around energy efficiency, accessibility, and sustainability (e.g., Toronto Green Standard), which increase both material and design costs.

🏗️ How Rising Costs Impact Housing Development

Feasibility of Projects For many builders, the financial model that worked 12–18 months ago may no longer be viable. Land values remain high, but profit margins are tightening. As a result, some mid-sized projects are being delayed, downsized, or shelved altogether.

Home Pricing With higher construction costs, developers must often pass on a portion of these increases to buyers—contributing to the ongoing affordability challenge in the GTA. This particularly affects first-time buyers looking for entry-level housing.

Shift Toward Higher Density To manage costs, some developers are pivoting from low-rise to mid- and high-rise projects, where per-unit construction costs can be spread more efficiently. This is reshaping the urban fabric of many GTA neighbourhoods.

🧩 How RIISE Navigates These Challenges

At RIISE, we approach construction with efficiency, innovation, and transparency. In response to today’s environment, we’re:

Building smarter, not just bigger—maximizing space and material use
Leveraging long-term supplier relationships to maintain predictable costs
Incorporating value engineering early in the design process
Exploring modular and prefabricated methods to improve timelines and consistency

We believe that resilient development comes from agility—adapting quickly without compromising on quality or vision.

📉 The Road Ahead

While rising construction costs pose a significant challenge, they also create an opportunity to rethink how we build. By embracing innovative techniques and staying responsive to market realities, the industry can continue to deliver much-needed housing to the GTA.

At RIISE, we remain committed to delivering smart, sustainable, and client-focused solutions—no matter the market conditions.