Ontario’s construction industry plays a vital role in the province’s economy, contributing $59.1 billion to GDP in 2023, yet it faces a complex landscape of growth and challenges. While investment in building construction rose to $66.6 billion in Q1 2025, with non-residential projects driving significant gains, the residential sector struggles with a 14% drop in housing starts in the first half of 2024 and ongoing declines in key regions like Toronto. Rising construction costs, labour shortages, and economic uncertainty further complicate the sector’s outlook, despite ambitious provincial goals to build 1.5 million homes by 2031. The following statistics provide a detailed snapshot of Ontario’s construction development trends, highlighting both opportunities and obstacles.
- Economic Contribution: In 2023, the construction industry contributed $59.1 billion to Ontario’s GDP, accounting for 6.8% of the province’s total GDP. However, this was a 2.0% decrease ($1.2 billion) from the previous year.
- Housing Starts:
- Housing starts in Ontario declined by 7.1% in 2023 compared to 2022, following a 3.5% decrease in 2022. This contrasts with significant increases of 17.9% in 2020 and 22.5% in 2021.
- In the first six months of 2024, housing starts were down 14% compared to the same period in 2023, with a notable 44% drop in June 2024.
- For the first quarter of 2025, housing starts in areas with populations of 10,000 or more fell 9% year-over-year nationally, with Ontario seeing a significant 38% contraction (6,722 fewer units), particularly in Toronto, which dropped 65% year-over-year in March 2025.
- In June 2025, Ontario recorded a 40% year-over-year decrease in housing starts in Toronto, driven by fewer multi-unit starts.
- Despite the declines, Ontario saw 44,002 new housing starts from January to June 2023, a 10% increase over the same period in 2022.
- Housing starts in Ontario declined by 7.1% in 2023 compared to 2022, following a 3.5% decrease in 2022. This contrasts with significant increases of 17.9% in 2020 and 22.5% in 2021.
- Investment in Building Construction:
- In the first quarter of 2025, investment in building construction in Ontario grew by 3.3% to $66.6 billion, with a year-over-year increase of 6.5%. Residential investment rose 3.5% to $46.3 billion, led by a 6.5% increase in multi-unit construction, while single-family home investment edged up 0.2%. Non-residential investment increased 2.8% to $20.3 billion, with Ontario contributing significantly (+$401.4 million).
- In May 2025, investment in building construction decreased by $491.4 million to $21.8 billion, with Ontario leading losses in residential construction: multi-unit construction dropped by $166.4 million and single-family homes by $80.4 million.
- Non-residential capital expenditures in Ontario for 2025 were $126.5 billion, up 8.7% year-over-year, with non-residential construction specifically at $77.1 billion, up 11.8%.
- In the first quarter of 2025, investment in building construction in Ontario grew by 3.3% to $66.6 billion, with a year-over-year increase of 6.5%. Residential investment rose 3.5% to $46.3 billion, led by a 6.5% increase in multi-unit construction, while single-family home investment edged up 0.2%. Non-residential investment increased 2.8% to $20.3 billion, with Ontario contributing significantly (+$401.4 million).
- Building Permits:
- In April 2025, Ontario’s building permits rose by $299.3 million, mitigating a national decline of 6.6% to $11.7 billion. Non-residential construction intentions in Ontario increased sharply by 20.8% to $2.0 billion, driven by commercial projects (+$259.0 million) in Toronto.
- Total building permits in Ontario for April 2025 were valued at $4.8 billion, up 6.7% month-over-month.
- In April 2025, Ontario’s building permits rose by $299.3 million, mitigating a national decline of 6.6% to $11.7 billion. Non-residential construction intentions in Ontario increased sharply by 20.8% to $2.0 billion, driven by commercial projects (+$259.0 million) in Toronto.
- Construction Costs:
- In 2023, ambulatory healthcare buildings had the highest construction costs in Ontario, ranging from $7,110 to $8,750 per square meter. Townhouses and warehouses were among the cheapest, while high-rise buildings with mid-end specifications reached up to $5,370 per square meter.
- Residential and non-residential building construction costs both increased by 0.8% in the first quarter of 2025, with year-over-year increases of 3.4% and 3.5%, respectively. Toronto saw no change in residential construction costs, while London had the largest increase (+2.5%).
- In 2023, ambulatory healthcare buildings had the highest construction costs in Ontario, ranging from $7,110 to $8,750 per square meter. Townhouses and warehouses were among the cheapest, while high-rise buildings with mid-end specifications reached up to $5,370 per square meter.
- Employment and Labour:
- In 2023, 15.3% of construction sector workers in Ontario held a university degree, lower than the provincial average of 39.3% across all sectors.
- The construction industry faces a labour shortage, with over 30% of workers nearing retirement age. Initiatives like Ontario’s Skills Development Fund and federal apprenticeship programs aim to address this.
- Construction employment is concentrated in the Toronto economic region (40.5% of provincial construction jobs), with over-representation in Stratford-Bruce Peninsula (12.1% of regional employment) and Kitchener-Waterloo-Barrie (9.5%).
- In 2023, 15.3% of construction sector workers in Ontario held a university degree, lower than the provincial average of 39.3% across all sectors.
- Regional Trends:
- The Greater Toronto Area (GTA) is driven by large-scale public transportation, nuclear refurbishment, and hospital projects, with residential investment expected to grow from 2025 to 2028.
- Central Ontario sees growth due to migration from the GTA, with residential investment projected to increase post-2025.
- Southwestern Ontario benefits from a strong housing market, while Eastern Ontario is driven by major engineering and institutional projects.
- Northern Ontario’s construction is influenced by mining and utility sectors, with new housing activity expected to rise by 2025.
- The Greater Toronto Area (GTA) is driven by large-scale public transportation, nuclear refurbishment, and hospital projects, with residential investment expected to grow from 2025 to 2028.
- Future Outlook:
- Ontario’s residential sector is expected to recover and grow steadily from 2025 to 2028, driven by demand from immigration and provincial policies promoting housing construction. Non-residential growth is projected to peak by 2027 and remain strong until 2029, supported by infrastructure and industrial projects.
- The province aims to build 1.5 million new homes by 2031, but current trends suggest challenges, with some estimates indicating a need for 150,000 annual housing starts by 2025 to meet this goal.
- Sentiment in the construction industry remains low, with Ontario’s single-family Housing Market Index (HMI) at 7.4 and multi-family HMI at 2.9 in Q1 2025, reflecting challenges like high construction costs, development charges, and economic uncertainty.
- Ontario’s residential sector is expected to recover and grow steadily from 2025 to 2028, driven by demand from immigration and provincial policies promoting housing construction. Non-residential growth is projected to peak by 2027 and remain strong until 2029, supported by infrastructure and industrial projects.
These statistics highlight a mixed outlook for Ontario’s construction sector, with growth in investment and non-residential activity but significant challenges in residential construction, particularly due to high costs, labour shortages, and declining housing starts. For more details, you can explore sources like Statistics Canada (www.statcan.gc.ca) or the Canada Mortgage and Housing Corporation (www.cmhc-schl.gc.ca).