--- canonical_url: "https://csls.ca/research/explaining-falling-residential-construction-productivity-in-canada/" title: "Explaining Falling Residential Construction Productivity in Canada: Implications for Housing Affordability" author: name: "shomp" url: "https://csls.ca/author/shomp/" date_published: "2025-12-15T10:00:00+00:00" date_modified: "2026-07-31T18:43:16+00:00" post_type: "research" summary: "Canada's housing affordability crisis is being exacerbated by a long-term decline in residential construction productivity" post_tag: - "Canada" - "housing affordability" - "housing prices" - "housing starts" - "labour productivity" - "provinces" - "residential construction" country_focus: - "Canada" province_region: - "National" research_category: - "Productivity" research_theme: - "Productivity and Economic Measurement" - "Sector/Industry Analysis" featured_image: "https://csls.ca/wp-content/uploads/2025/12/research-wellbeing.webp" status: "publish" --- # Explaining Falling Residential Construction Productivity in Canada: Implications for Housing Affordability Canonical URL: https://csls.ca/research/explaining-falling-residential-construction-productivity-in-canada/ # Explaining Falling Residential Construction Productivity in Canada: Implications for Housing Affordability [Download full PDF report](https://csls.ca/pdf/csls2025-08.pdf) Cite this report × Cite this report as: Shariati, Alisaleh. 2025. “Explaining Falling Residential Construction Productivity in Canada: Implications for Housing Affordability.” CSLS Research Report 2025-08. Ottawa: Centre for the Study of Living Standards. https://csls.ca/research/explaining-falling-residential-construction-productivity-in-canada/ ## Author: - Alisaleh Shariati Centre for the Study of Living Standards (CSLS) ## Report 2025-08 December 2025 187 pages ## Related research [Measuring the Appropriate Outcomes for Better Decision-Making: A Framework to Guide the Analysis of Health Policy Matthew Calver March 2016 | Report 2016-03 | 132 pages](https://csls.ca/research/measuring-the-appropriate-outcomes-for-better-decision-making-a-framework-to-guide-the-analysis-of-health-policy-2016-03/) [Living Standards Domain of the Canadian Index of Wellbeing Andrew Sharpe, Christopher Ross November 2011 | Report 2011-17 | 124 pages](https://csls.ca/research/living-standards-domain-of-the-canadian-index-of-wellbeing-2011-17/) [Productivity: Key to Economic Success Centre for the Study of Living Standards (CSLS) March 1998 | Report 1998-01 | 99 pages](https://csls.ca/research/productivity-key-to-economic-success/) [Productivity Trends: A Canada-U.S. Comparison Centre for the Study of Living Standards (CSLS) January 1999 | Report 1999-01 | 6 pages](https://csls.ca/research/productivity-trends-a-canada-u-s-comparison/) [New Estimates of Manufacturing Productivity Growth for Canada and the United States Andrew Sharpe March 1999 | Report 1999-02 | 21 pages](https://csls.ca/research/new-estimates-of-manufacturing-productivity-growth-for-canada-and-the-united-states/) [Apprenticeship in Canada: A Training System Under Siege? Andrew Sharpe December 1999 | Report 1999-03 | 59 pages](https://csls.ca/research/apprenticeship-in-canadaa-training-system-under-siege/) [A Survey of Indicators of Economic and Social Well-being Andrew Sharpe July 1999 | Report 1999-cprn | 72 pages](https://csls.ca/research/a-survey-of-indicators-of-economic-and-social-well-being/) [Creating a More Efficient Labour Market Centre for the Study of Living Standards (CSLS) June 2001 | Report 2001-02 | 147 pages](https://csls.ca/research/creating-a-more-efficient-labour-market/) [Productivity Trends in the Construction Sector: A Case of Lagging Technical Progress Centre for the Study of Living Standards (CSLS) November 2001 | Report 2001-03 | 177 pages](https://csls.ca/research/productivity-trends-in-the-construction-sector-a-case-of-lagging-technical-progress/) [The Impact of the National Child Benefit Supplement on the Low Income Status of Canadian Families with Children: The SPSD/M Results Centre for the Study of Living Standards (CSLS) June 2002 | Report 2002-01 | 59 pages](https://csls.ca/research/the-impact-of-the-national-child-benefit-supplement-on-the-low-income-status-of-canadian-families-with-children-the-spsd-m-results/) ## Abstract ## Résumé EN FR Copy link Email LinkedIn The productivity performance of Canada’s residential construction has been abysmal since the turn of the century. Output per hour in 2024 was 8 per cent lower than in 2000, reflecting an average annual decline of 0.4 per cent over the period. This report sheds light on this troubling development, with particular attention to the sharp 3.8 per cent average annual decline in labour productivity from 2019 to 2024, which has intensified cost pressure and further undermined housing price affordability in Canada. This report identifies several factors contributing to the construction sector’s poor productivity performance, including: technological stagnation marked by persistent reliance on manual building methods; an industry structure dominated by small firms that are slow to adopt innovations; and regulatory barriers, such as fragmented building codes, lengthy permitting processes, and restrictive zoning. Since 2019, “labour hoarding” (i.e., retaining workers despite reduced activity) was also a significant factor. This collapse in labour productivity after 2019 raised unit labour costs by nearly 8 per cent annually in residential construction, well above economy-wide cost pressures. We estimate this added $6–$7.7 billion to new housing costs, accounting for 15-20 per cent of the increase in new homes from 2019 to 2024, raising average homebuyer costs by $24,000-$31,000 in 2024. This report concludes that, without a dramatic improvement in residential construction productivity, Canada will not meet its ambitious housing supply targets. It recommends actionable strategies to boost residential construction productivity — including wider adoption of digital tools and off-site manufacturing, streamlined regulations, and stronger recruitment of skilled workers — which taken together, could lower home costs, boost supply, and ultimately restore housing affordability over the long run. La performance de la productivité dans la construction résidentielle au Canada a été désastreuse depuis le début du siècle. La production par heure travaillée en 2024 était inférieure de 8 % à celle de 2000, ce qui correspond à un déclin annuel moyen de 0,4 % sur la période. Ce rapport met en lumière cette évolution préoccupante, en accordant une attention particulière au fort recul annuel moyen de 3,8 % de la productivité du travail entre 2019 et 2024, qui a intensifié les pressions sur les coûts et davantage miné l’abordabilité du logement au Canada. Ce rapport cerne plusieurs facteurs contribuant à la faible performance du secteur de la construction en matière de productivité, notamment : une stagnation technologique marquée par un recours persistant à des méthodes de construction manuelles; une structure industrielle dominée par de petites entreprises lentes à adopter les innovations; et des obstacles réglementaires, tels que des codes du bâtiment fragmentés, des processus d’octroi de permis longs et un zonage restrictif. Depuis 2019, la « rétention de main-d’œuvre » (c.-à-d. le maintien en poste de travailleurs malgré une activité réduite) a également constitué un facteur important. Cet effondrement de la productivité du travail après 2019 a fait grimper les coûts unitaires de main-d’œuvre de près de 8 % par année dans la construction résidentielle, bien au-delà des pressions sur les coûts à l’échelle de l’économie. Nous estimons que cela a ajouté de 6 à 7,7 milliards de dollars aux coûts des nouveaux logements, ce qui représente de 15 à 20 % de la hausse du prix des logements neufs entre 2019 et 2024, augmentant les coûts moyens pour les acheteurs de 24 000 $ à 31 000 $ en 2024. Ce rapport conclut que, sans une amélioration spectaculaire de la productivité de la construction résidentielle, le Canada n’atteindra pas ses ambitieux objectifs en matière d’offre de logements. Il recommande des stratégies concrètes pour stimuler la productivité de la construction résidentielle — notamment une adoption plus large des outils numériques et de la fabrication hors site, une réglementation simplifiée et un recrutement accru de travailleurs qualifiés — qui, ensemble, pourraient réduire les coûts des logements, accroître l’offre et, en définitive, rétablir l’abordabilité du logement à long terme. [Download full PDF report](https://csls.ca/pdf/csls2025-08.pdf)