In between continuous demand shifts, immigration policy tweaks, and dangers of tariffs, 2025 was a temperamental year for the Canadian building and construction sector to say the least. However 2026 might bring some stability, according to a yearly report published previously this month by construction consultancy company BTY Group.
“Building and construction activity at the beginning of the year maintained the momentum seen at the tail end of 2024, but metrics moved after tariffs were announced and implemented early in the year,” stated BTY Group. “Population growth likewise slowed significantly which expanded existing demand gaps for property construction, most especially in British Columbia and Ontario. Activity got from Q2 to Q3 however, as tariff impacts were better comprehended and cost escalation was primarily in line with general inflation.”
From a population perspective, 2025 saw a 0.9% development year-over-year– roughly 389,000 individuals– that represents the smallest level of population growth given that 2016. The decrease in immigration targets will ease demand-site pressure, said BTY Group, but there stays a requirement for inexpensive housing, modern-day facilities, brand-new schools, medical facilities, transit systems, and more.British Columbia”
In spite of a
sluggish start, BC fared fairly well during a 2025 that was anticipated to be moderate,” stated BTY Group. “Real estate begins picked up their speed in the latter part of Q2, and growth continues to sprawl beyond Vancouver with consistent levels of activity in locations such as Vancouver Island and the Okanagan region.”
Economically, BTY Group said tariffs led to pressure on regional softwood lumber products, but the region as a whole faired well because around 50% of exports are with non-US trading partners. Consumers likewise moved their costs, such as investing related to tourism, away from the United States and back within BC.Construction expenses for the commonly-seen low-rise wood-frame structure up to six floors is expected to vary from$380 to $480 per sq. ft. in Vancouver, and in between $320 and $420 in Surrey. For high-rise concrete towers over 16 storeys, those numbers range from $500 to $750 in Vancouver and $450 to $500 in Surrey.
Building and construction expense varieties
for British Columbia.(BTY Group)Ontario Regrettably, Ontario didn’t fare as well, and the “significant headwinds” seen in 2025 will likely continue in 2026, according to BTY Group, although key sectors such as manufacturing and aluminum production are expected to rebound as trade paths beyond the United States are established.
“United States tariffs are a limitation to the local production and metals sector, provincial unemployment is high, and a sluggish real estate market (especially in Toronto) has actually slowed capital inflow into the sector. Increased unpredictability constrains personal investment in the province, and condominium construction will likely remain soft as financiers sit on the sidelines.”
Need for real estate still exists, but is now mainly concentrated in missing out on middle-type real estate, like townhouses and walk-up apartments. Building and construction costs for townhouses in the Greater Toronto Location are set to range from $220 to $375 per sq. ft, while expenses for low-rise wood-frame buildings will range from $225 to $330– both considerably lower than Vancouver.
Building cost varieties for Ontario.(BTY Group )2026 As a whole, building and construction expenses stabilized throughout 2025. Expense escalation has slowed down considerably in most provinces, in line with need also dropping, and BTY Group states they expect cost escalation in 2026 to be mostly aligned with basic inflation. Residential construction expense escalation is anticipated to be less than 2% in BC– the most affordable in the country– and in between 2% to 4% in Ontario.
“For the majority of cities, demand for housing corresponds and continues to accommodate the sharp increase in population that took place in 2023/2024,” the report notes. “In markets such as Toronto and Vancouver nevertheless, an excess of condos, particularly smaller sized studio and one-bedroom systems, have flooded the marketplace.”
Construction expense escalation projections by region. (BTY Group)
“Financiers and Developers have actually rotated their efforts to affordable/non-market real estate projects,” they added. “With more comprehensive incentives and broader access to capital, designers are moving their focus– especially as the Government of Canada opens the Build Canada Residence (BCH) initiative.”
“Looking ahead, modest growth is projected across the provinces,” they concluded. “Canada likely avoids a substantial economic downturn in favour of a sluggish rebound from 2025’s slow performance. Genuine GDP development is anticipated to stabilize in 2026 as individuals and businesses browse continued unpredictability due to altering tariff pressures.”
For 2026, BTY Group is projecting genuine GDP development of 1.5% (after growing 1.7% in 2025), a joblessness rate of 6.9%, and 250,000 real estate starts, but stresses that there continues to be a “high degree of unpredictability around economic relationships with the United States.”