City approvals for new buildings take twice as long in Vancouver than Edmonton

Jan 14 2023, 3:35 am

Municipal governments that oversee the worst housing affordability challenges in Canada also have some of the longest estimated average approval timelines for new building development applications.

Based on a new report by Canadian Home Builders’ Association (CHBA), which commissioned Altus Group Economic Consulting to perform the data analysis, the City of Toronto has the longest estimated average approval timelines amongst 20 major cities evaluated.

In 2022, the weighted average approval timelines in Toronto reached 32 months — a 50% increase 2020’s figure of 21 months.

The City of Vancouver ranked 13th, with an average of 15 months — up from 13 months in 2020.

Within the City of Surrey, average timelines in 2022 were only slightly better at 14 months, up by two months compared to two years earlier.

Although it has one of the longest runways amongst the municipal governments analyzed, the City of Burnaby was one of a handful of the 20 cities that saw improved estimated average approval timelines between 2020 and 2022. Vancouver’s suburban neighbour saw a drop from 27 months in 2020 to 21 months in 2022.

For further contrast, the municipal governments of Calgary and Edmonton, which have endured depressed housing markets over much of the past decade, were provided with estimated average approval timelines of five months and seven months, respectively, in 2022. Edmonton’s figure remained the same from 2020, while Calgary’s timeline more than doubled from five months in 2020.

canada estimated average building approval timelines

Estimated Average Approval Timelines, by Municipality, 2020 & 2022 Study. (Altus Group Economic Consulting)

“Many municipalities have adopted a high percentage of identified tools and processes that are thought to help make the application process easier and more transparent for applicants, but some municipalities do still not make things such as application requirements, technical study terms of reference, or key planning documents available to applicants, which can hinder the quality of submissions received, and can indirectly impact municipal review timelines,” states the report, explaining some of the most common factors that lengthen timelines.

“Unless major changes are made to streamline approval processes for smaller applications, the extremely high ‘per unit’ time investments being made in the municipal review process will make housing forecasts difficult to achieve and put a significant strain on finite staffing resources.”

According to the study’s analysts, every three months of delay before construction can begin, or the longer construction periods are extended, has significant implications to the cost of construction.

For every three months, pre-construction costs add up by an extra $8 to $10 per sq ft, while in-construction costs increase by $4 to $6 per sq ft from general conditions and interest on financing, plus $1 per sq ft for every rise of interest rates by 1%.

On a per residential unit basis, the average cost of delay, including construction cost escalation, is between $2,600 and $3,300 each month. Over half a year, this would amount to between $16,000 and $20,000 per unit in extra costs due to delays with municipal government application processes.

Across the country, based on Statistics Canada data, construction costs in the first quarter of 2022 were up by 22.6% overall compared to the first quarter of 2021, including 17.1% for high-rise residential buildings, 21.4% for low-rise residential buildings, and 25.5% for townhomes.

Within Vancouver, the year-over-year construction cost increases were 12% for high-rise residential buildings, 16.2% for low-rise residential buildings, and 17.5% for townhomes.

canada construction cost inflation homes

Change in Construction Costs by Residential Unit Type, between Q1 2021 and Q1 2022. (Altus Group Economic Consulting)

In recent years, the BC government has been working with municipal governments across the province to improve the efficiency and speed of their permitting system, such as implementing online and digital tools, and simplifying processes. The provincial government will also begin to mandate municipal governments to meet new housing supply quotas.

As well, the new political leadership of the City of Vancouver, led by the ABC Vancouver party, has vowed to review the permitting system to simplify processes and reduce timelines for the spectrum of application types.

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