OTTAWA—Most people are surprised to learn that this country’s biggest economic sector is not oil and gas or manufacturing, but real estate. Real estate contributes more than 20 per cent of Canada’s GDP, leaving manufacturing, oil and gas, and finance and insurance far behind. In addition, in the five years before 2022, Canadians’ investment in dwellings as a percentage of total gross fixed capital formation was more than 40 per cent higher than in other G7 countries.
This overemphasis on housing is an important factor in what is perhaps Canada’s most pressing economic problem: declining economic productivity, a prosperity-sapping trend the Bank of Canada has called “an emergency.” Part of the problem is the construction industry itself. Composed overwhelmingly of small companies, it has been hampered—among other things—by rising costs, supply chain issues, and labour shortages, and is unusually inefficient.