A new Statistics Canada study finds that falling productivity in the construction sector—driven largely by small firms—is contributing to Canada’s housing affordability issues. Labour productivity in housing construction dropped 37.3 per cent between 2001 and 2023 as employment grew rapidly while output lagged. CMHC deputy chief economist Aled ab Iorwerth says boosting efficiency through better technology, improved materials use, and a more skilled workforce is essential to lowering construction costs and meeting the “massive increase” in housing starts needed by 2035. He emphasizes that it will take years of consistent building and modernization to address affordability pressures.
Small construction companies, particularly those with fewer than five employees, were the biggest contributors to the productivity decline, though larger firms also struggled to improve output due to the complexities of building multi-unit projects. Ontario accounted for most of the nationwide productivity drop, while British Columbia was the only province with a positive contribution, driven by shifts in labour share rather than efficiency gains. The study highlights that firms are often adding more workers instead of adopting new technologies, prefabs, robotics, or economies of scale. Ab Iorwerth warns that without major changes in how homes are built, productivity will continue lagging and affordability will remain strained.
