For all the talk of how unattainably high Toronto home prices are, it may come as a surprise to learn that building costs in Canada's largest city are actually among the lowest on the continent.

Though developers would love to tell you otherwise, it's not as expensive to build homes in the city as one might assume, according to the North American Q4 construction cost report released by analysts Rider Levett Bucknall.

That doesn't mean it's going to stay cheap, as Canada is home to some of the most rapidly climbing building costs in North America, and Toronto is, as you would expect, where these rates are rising the fastest.

Toronto's annual growth for construction costs (the expenses for building a home such as materials, construction equipment, and labour) soared by 13.25 per cent in 2021, the highest on the continent. But it turns out this runaway growth didn't have much of an impact.

Even with this spike, multi-family construction costs for Toronto ranked the cheapest among any major North American city based on the low average estimate of $180 per square foot, and second-cheapest based on the high average estimate of $245 per square foot.

It's the same story with single-family homes, with a low average construction cost estimate of $240 per square foot, ranking the third cheapest on the continent and fourth cheapest when measured by the high-end estimate of $465 per square foot.

It is actually more expensive to build a home in cities like Phoenix, Arizona and Las Vegas, Nevada, places you'd assume would be cheaper due to their sparser population density and lack of natural barriers driving up demand like the greenbelt and lake bounding Toronto.

Still, the cost of building a home doesn't always reflect the sticker price, and a long list of factors like developer profit margins and high government fees and taxes for development drive up the actual cost of a home purchase significantly.

For reference, the average cost of a home in Las Vegas rose to $494K (CAD) in 2021, while Toronto's average home price crossed the $1 million mark in 2021 for an all-time high despite having lower hard construction costs.