CONSTRUCTION MARKET OVERVIEW
Resilient activity amid evolving risks
Canada’s construction sector closed 2025 with a mix of hesitancy and optimism as its GDP rose 2.3% year-over-year, demonstrating a degree of resilience to tariff-linked uncertainty. Growth was also broad-based, with repair, non-residential, residential and engineering construction increasing by 0.7%, 1.7%, 2.2% and 3.7%, respectively.
Source: Statistics Canada
Investment in building construction (IBC) data moved in the same direction as GDP, increasing by 4.9% in 2025. While construction GDP measures the industry’s value-added (labour and capital) to the economy, IBC statistics reflect the sector’s total expenditure, which gives a more rounded view on construction performance. Another key difference is that the IBC information includes real estate and excludes engineering and repair coverage. So, while both have moved the same direction at a top level, they measure different things and, unlike construction GDP, the underlying IBC growth varied across markets and asset types.
Source: Statistics Canada
Residential construction was the strongest contributor to overall activity growth in 2025, with residential IBC increasing by 7.6% over the year. This was driven largely by multi‑dwelling formats, which saw a 12.9% annual increase, whereas single-dwelling growth was much softer at 1.6% as land constraints and high development costs have reduced project viability.
Industrial investment contracted by 7.3%, contributing heavily to non-residential IBC dipping by 0.9% in 2025. This reflects a cooling after significant overbuilding in 2023–2024 alongside the drag from ongoing Canada‑US trade tensions — leading to investor apprehension.
Commercial construction also declined by 2.0% in 2025, weighed down by hybrid work models and constrained financing. However, national office indicators improved late in the year as vacancy rates began to fall, supported by rising demand for higher‑quality spaces and return‑to‑office mandates.
Institutional and governmental construction remained a bright spot in 2025, with investment expanding by 5.7% to mark its sixth consecutive year of growth. Despite population growth slowing due to recalibrated federal immigration targets, continued expenditure on education and healthcare has spurred institutional activity along.
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