Prefabricated modular modules assembled on site as cranes work overhead; a coastal spaceport is visible in the distance.
Canada, August 19, 2025
Canada’s housing sector is at a pivot point as affordability pressures persist despite modest productivity gains and faster modular build times. Builders report improved outcomes from AI, BIM and digital twins while offsite methods cut completion times and costs. At the same time, purpose-built rental development is cooling as institutional returns fall and financing tightens. Regional activity is uneven—Montreal and prairie centres see multi‑unit growth while Toronto and Vancouver face slumps. Atlantic provinces are refocusing immigration on key occupations, and a private spaceport project in Newfoundland signals new industrial investment alongside housing policy efforts to boost supply.
The Canadian housing market is navigating an affordability crisis even as demand cools in headline cities. Home prices in major markets like Toronto and Vancouver remain stubbornly high, but investors are watching a handful of signals: modest productivity gains in construction, the spread of modular construction and digital tools, and shifting regional dynamics that are lifting starts in some areas while cooling others. A national picture shows a sector poised for transformation, aided by government programs, technology adoption, and targeted immigration-driven workforce changes.
On productivity, the latest data show the Canada Construction Labour Productivity Index at 92.47 as of March 2025, reflecting a 2.15% year-over-year gain. The index uses 2007 as a base year (100) and reveals that Canada’s construction sector still lags the United States on productivity, a gap the OECD attributes in part to weak adoption of advanced technologies and a fragmented SME landscape. Yet there is a growing consensus among leaders: technologies such as AI, Building Information Modelling (BIM), and digital twins are essential for boosting efficiency. A recent survey indicates 90% of construction leaders see these tools as mandatory for progress, and 81% of firms report measurable productivity gains from recent tech investments.
These advances are not theoretical. In projects like Regina’s Horse Dance Lodge, AI, BIM, and modular construction adoption—supported by government initiatives—have reduced build times by up to 40%, with the lodge completed in 12 months using offsite methods. The rapid‑housing push, including the Rapid Housing Initiative, has similarly cut build-to-occupancy times by up to 40%. AI-driven design checks and IoT sensor networks are trimming costly errors, while digital twins enable predictive maintenance and risk forecasting. These tools help address labor shortages by reducing on‑site labor and streamlining workflows, a trend that investors are watching closely as early adopters may outperform peers.
From an investment lens, a Scotiabank model suggests even a modest 1% reduction in unit labour costs due to productivity improvements could translate to a 1.2% decrease in home prices. The federal government’s $129 billion housing plan—which includes the creation of “Build Canada Homes”—aims to double construction output to 500,000 units annually by 2030 with a strong emphasis on modular construction and mass timber. Provincial incentives vary, with some jurisdictions temporarily halving development charges for multi‑unit housing and others removing the GST on homes below certain price points. These policy levers are intended to accelerate supply while keeping affordability in view.
Canada’s regional housing picture is diverging. Toronto and Vancouver face oversupply pressures and price erosion in some segments, while cities like Calgary and Montreal display resilient demand and new opportunities. Prairie provinces are seeing a surge in multi‑family starts driven by rental demand and supportive policies. In the housing market index and builder confidence data, the Canada Home Builders’ Association (CHBA) HMI sits near historical lows, with single-family confidence at 24.9 and multi-family at 22.8, indicating continued caution even as regional activity evolves.
The rental segment presents a mixed outlook. While CMHC publicly signals rising rental starts, industry observers warn that early-stage starts have fallen sharply—tracking down around 60% in the latest measures. In markets like Toronto and Vancouver, rents have begun to soften, complicating project economics as developers face sticky development charges and financing hurdles. New rental projects increasingly rely on external investors, with some players reporting returns as low as 4.5% annually, a level that dims the appeal of new builds for some institutions. Yet, noteworthy activity persists: Starlight Investments has launched new rental projects in Victoria, and Fitzrovia has raised funds to build purpose‑built rentals with amenities aimed at downsizers and young families. The risk landscape grows with potential timing lags in restarting shelved projects, which could intensify shortages in the years ahead if demand resurges.
RioCan’s Living division—created in 2018 to pivot toward purpose‑built rental towers—announced plans to exit most residential development and to pursue outside investment for new projects, with RioCan contributing land and expertise. The shift follows a stretch of weaker returns in rental development and softer rents in core markets, compounding the challenge of attracting new capital for fresh projects. The broader takeaway for investors: rental construction economics are now more sensitive to yields around 4.5% and to shifts in development costs, with land costs beginning to fall as many condo projects face receivership and other distress scenarios. Government supports such as GST relief on new builds and favorable financing continue to shape the funding environment, but the pipeline faces a lag as projects wind down before new starts can ramp up.
A distinctly different development narrative is unfolding in the Atlantic region. NordSpace, a private Canadian company, began construction on its Atlantic Spaceport Complex (ASX) in Newfoundland and Labrador near St. Lawrence. ASX is designed to support NordSpace’s Tundra orbital rocket and the first test flight of the Taiga suborbital vehicle, while inviting other launch providers to use the site. The asset is fully sourced and built from within Canada, with rockets assembled from Canadian parts and in‑house 3D‑printed engines. The project features two facilities: Space Launch Complex‑01 (SLC‑01) with two pads for orbital rockets, and SLC‑02 for suborbital flights and space domain awareness tracking. NordSpace’s first Taiga flight is planned as a low‑altitude demonstration, not orbit, with a second flight expected early the following year to demonstrate full capability. NordSpace sees its long‑term potential for Tundra to rival platforms like Rocket Lab’s Electron, with Terra Nova—the first NordSpace satellite—slated to launch in 2026 on a SpaceX Falcon 9 rideshare mission to test propulsion and imaging tech. ASX also underpins NordSpace’s SHARP initiative, a trio of hypersonic research vehicles for national defense applications. Domestic launch capability is projected to generate significant economic activity and thousands of jobs through 2035.
In 2025, Atlantic provinces have shifted toward a more targeted use of the Atlantic Immigration Program (AIP) to fill skilled roles. The program offers a faster route to permanent residence for workers with job offers from designated employers and features LMIA‑exempt work permits to begin work while PR is processed. Specific provincial adjustments include PEI prioritizing high‑demand sectors and Nova Scotia directing attention to healthcare, social assistance, and construction among permit holders, with special consideration given to foreign nationals already residing in‑province. Newfoundland and Labrador adopted an Expression of Interest model for its PNP and AIP, effective February 19, 2025, while New Brunswick expanded its PNP with an additional 1,500 spots in June 2025. The eligibility framework emphasizes work experience, education, language, settlement funds, and employer endorsement, with exemptions for certain applicants already in Canada and for international graduates. This workforce reshaping aims to align immigration with regional needs while supporting construction productivity momentum.
Canada’s housing market stands at a crossroads where tech adoption, policy innovation, and regional demand dynamics will shape supply, affordability, and investment returns. For investors, opportunities exist in tech‑driven construction firms, high‑growth regions, and public‑private partnerships, but risks include regulatory delays and lingering labour shortages. Workforce development programs—apprenticeships and DEI initiatives—will be crucial to sustaining productivity momentum. The market’s path forward hinges on translating productivity gains into tangible supply, balancing rental demand with affordability, and harnessing new national and regional programs to support construction and housing starts.
The market is responding to a combination of productivity improvements, modular construction adoption, government housing initiatives, and shifting regional demand that is reshaping starts and rents in different cities.
The Construction Labour Productivity Index stood at 92.47 in March 2025, up 2.15% year over year, signaling modest gains amid ongoing structural challenges and uneven technology adoption.
NordSpace is developing the Atlantic Spaceport Complex in Newfoundland and Labrador to support orbital and suborbital programs, aiming to stimulate regional activity, create jobs, and diversify the economy through domestic space industry capability.
AIP priorities are tuned to regional needs, with provinces designating sectors and employers to streamline pathways to permanent residence, including temporary permits to begin work while PR is processed, helping to address labor demands in healthcare, construction, and manufacturing.
Rising costs, sticky development charges, and financing challenges are weighing on yields, with some markets experiencing softening rents and delayed project starts that could slow new supply in coming years.
| Feature | Description |
|---|---|
| Productivity and technology | Index shows gains; AI, BIM, digital twins are shaping efficiency and reducing errors. |
| Modular construction | Pre-fabrication has shortened timelines and supports faster occupancy, with government backing. |
| Regional demand | Diverging trends: Toronto/Vancouver cooling; Calgary/Montreal and Prairie markets showing resilience and growth. |
| Rental market dynamics | Rents under pressure in some markets; institutional capital cautious due to yields around 4.5% and rising costs. |
| Atlantic immigration and workforce | Targeted AIP programs and EOI models aim to align labor with regional housing and construction demand. |
| NordSpace and spaceports | ASX in Newfoundland supports orbital and suborbital programs, with domestic supply chain benefits and job creation. |
Rockford, August 28, 2025 News Summary This summer, significant construction projects will kick off across the…
Tuscola, Illinois, August 28, 2025 News Summary Cronus Chemicals is set to invest $2 billion to…
Tuscola, Illinois, August 28, 2025 News Summary Cronus Chemicals has announced plans to construct a $2…
Will County, August 28, 2025 News Summary The Illinois Department of Transportation has announced a significant…
Northbrook, Illinois, August 28, 2025 News Summary Construction has officially kicked off for a new Global…
Ogle County, Illinois, August 28, 2025 News Summary Construction work is set to commence on Illinois…