OTTAWA — Ottawa plans to make Canadian homebuilders embrace new technology and building methods by including it as a condition of deals the new federal homebuilding agency strikes with private industry, Housing Minister Gregor Robertson said in an interview with The Logic.

“Construction is the last major industry to modernize and digitize and fully embrace innovation to build faster and cheaper and more efficiently,” said Robertson.

Plenty of innovative technology and building methods already exist in Canada. Some builders are using AI-driven processes in which robots prefabricate entire sections of homes in climate-controlled factories, which can then be assembled on-site within days. Most, though, stick to traditional techniques that rely on physical labour and, in most parts of the country, must slow down in winter. Productivity in the sector has plummeted 25 per cent since 2016, and stood at about 11 homes per 100 workers in 2023.

There are a few reasons Canada’s builders haven’t followed the footsteps of cold-weather countries like Sweden, who turned to factory-built homes to boost the sector’s productivity. One is this country’s patchwork of fragmented rules, regulations and interpretations of building codes in provinces and cities, according to a recent report by C.D. Howe Institute senior policy analyst Tasnim Fariha. 

Robertson said the government could build on its Housing Accelerator Fund—which offers money to municipalities to cut red tape and speed up building permits—and use it to encourage cities to harmonize the rules for off-site construction methods. As of July, the Canada Mortgage and Housing Corporation had earmarked 98 per cent of the $4.44-billion fund, though the industry and Canadian municipalities will be waiting to see if Prime Minister Mark Carney tops it up in the next budget. 

Robertson said the chief challenge is the boom-and-bust cycle of the homebuilding industry. 

“They need demand to be steady, so their factories can add second shifts and then produce more predictably for the market, and in this case, for non-market housing,“ said Robertson, who launched the Build Canada Homes agency on Sunday, which is focused on housing for low- and moderate-income families who are priced out of the market. 

The new agency is Carney’s answer to Canada’s housing crisis, with a mandate to finance affordable, non-market housing projects. Builders who want in on those developments will have to make use of new technology and modern methods, including modular construction and prefabrication.  

That should give fledgling building-tech companies the stable income they need, Robertson said. If they can scale up, they’ll be able to make a more compelling case to mainstream market builders as well, he hopes. “We want to see all of them working together.”

Build Canada Homes will set aside some money to help scale up new building tech, but the “vast majority” of Build Canada Homes’ initial $13-billion funding envelope will go to financing housing projects, Robertson said. The minister said the government hasn’t decided if those capital investments will replace Ottawa’s $50-million Homebuilding Technology and Innovation Fund, which is set to expire in March. Compared to supports for industries like battery innovation, federal and provincial programs to help innovative building companies scale up have been “woefully inadequate,” Robertson said, adding, “There’s lots more we can do.”

As of 2024, modular building represented only 7.5 per cent of Canada’s overall construction market, according to the Modular Building Institute (MBI), a global trade association based in Charlottesville, Va. Robertson estimates fewer than five per cent of buildings in Canada are manufactured off-site, compared to almost 50 per cent in Sweden.

Financing has been a long-standing struggle for that industry, said MBI executive director Tom Hardiman. “For a factory, they have to order all the materials up front,” he said. “There is a little larger draw needed on the front end, and developers, banks and lenders aren’t always crazy about that.”

Robertson got a front-row seat to some of the challenges in the industry as an executive vice-president at Nexii Building Solutions, a green-construction company formerly based in Vancouver. The firm made panels out of a proprietary blend of sand, aggregate and binding material. The product was marketed as a durable alternative to concrete that could reduce the construction industry’s carbon footprint while speeding up projects.

He worked for Nexii during its meteoric rise and major crash after aggressive expansion plans failed to produce expected gains. The company and its debts were transferred to two American firms shortly after Robertson left the company as part of a 2024 bankruptcy sale. 

“I certainly saw the challenges that the industry has in scaling up, their shortage of capital, and demand is uneven,” Robertson said. “It’s been a tough industry, and some great Canadian companies have struggled.”