Housing now framed as productivity drag
Experts and commentators argue Canada’s housing boom has begun to damage economic productivity, with real estate now estimated to account for roughly 13% of GDP. The reporting collects expert views that capital and policy attention shifted toward housing at the expense of more productive investment. (thehub.ca)
Canada’s housing boom is now being described by economists and policymakers as a drag on productivity, not just an affordability crisis. The shift comes as housing-related production added $143.4 billion to gross domestic product in 2024, while the broader real estate and rental sector remained one of the country’s biggest industries. (statcan.gc.ca 1) (statcan.gc.ca 2) Statistics Canada said investment in residential housing reached $237.7 billion in 2024 and was linked to more than 1.2 million jobs. The national stock of housing assets totalled $4.2 trillion in 2024, equal to 25 percent of national wealth. (statcan.gc.ca) The Bank of Canada has been warning that Canada’s productivity problem is tied to weak business investment in the tools that raise output, including machinery, equipment and intellectual property. In a March 26, 2024 speech, Senior Deputy Governor Carolyn Rogers said Canada had seen “no productivity growth in recent years” and that investment levels were “nowhere near as high as they should be” in those areas. (bankofcanada.ca 1) (bankofcanada.ca 2) That argument has gained traction as Ottawa has tried to reframe housing as part of a wider growth problem. Budget 2025 said business investment had fallen at an annualized 8 percent rate in the second quarter and said the government wanted to steer more private capital toward machinery, equipment and innovation. (budget.canada.ca) The backdrop is a housing shortage that has not gone away. Canada Mortgage and Housing Corporation has said the country still needs about 3.5 million additional homes by 2030, on top of what is already expected to be built, to restore affordability. (cmhc-schl.gc.ca 1) (cmhc-schl.gc.ca 2) Builders did increase output in 2025, but not enough to close that gap. Canada Mortgage and Housing Corporation said housing starts rose 5.6 percent to 259,028 units in 2025, the fifth-highest annual total on record, with much of the gain coming from rental apartments and other multi-unit projects. (cmhc-schl.gc.ca) (cmhc-schl.gc.ca) Canada Mortgage and Housing Corporation also said in February 2026 that new home construction is expected to decline through 2028 as builders face higher costs, weaker demand and a backlog of unsold condominiums. That leaves policymakers trying to solve two problems at once: build more homes while also lifting investment outside housing. (cmhc-schl.gc.ca) The competing view is that housing itself is productive because it creates jobs, adds to the housing stock and supports population growth. Statistics Canada’s Housing Economic Account measures exactly that activity, even as central bank officials and outside economists argue that an economy tilted too far toward property can crowd out investment that raises output per worker. (statcan.gc.ca) (bankofcanada.ca) That is why the debate has changed tone in 2026. Canada is still short millions of homes, but the policy discussion is no longer only about prices and supply; it is also about how much of the country’s money, labour and political attention has been pulled into housing instead of the rest of the economy. (cmhc-schl.gc.ca) (budget.canada.ca)
