Canada’s construction industry is facing record demand while productivity declines, prompting a shift toward industrialisation. While Sweden began this transition decades ago, Canada’s slower adoption has led to an urgent demand for advanced building solutions.

Today, offsite construction accounts for less than 1% of residential building in Canada, compared to over 45% in Sweden and 90% for single-family homes.

CANADA’S GROWING HOUSING CRISIS

The Canadian Mortgage and Housing Corporation (CMHC) estimates that Canada will need 3.5 million more units by 2030 to meet the demand for affordable housing.

Rapid population growth, with over 40 million people and nearly 500,000 immigrants in 2023 alone, has worsened the crisis.

Housing affordability is now out of reach for many Canadians, with over 60% of household income going to mortgage payments, and rental vacancy rates at record lows as rents increase beyond inflation and wage growth.

Construction productivity in Canada is hindered by rising material costs, labour shortages, and inefficient regulatory processes. More than 20% of Canada’s construction workforce is expected to retire by 2030, and residential construction costs have risen over 54% since 2020. Complex permit and approval processes add further delays.

Canada’s traditional construction industry is fragmented, labour- and time-intensive, and costly. There is a growing consensus that automated, efficient, sustainable, and affordable building solutions are essential – and urgent. Offsite construction is a clear solution.

SWEDEN AS A GLOBAL LEADER IN OFFSITE CONSTRUCTION

With over 90% of single-family homes built offsite, Sweden is recognised worldwide for its expertise in advanced building solutions. Many countries consider Sweden as a model for overcoming the challenges of scaling offsite construction.

Sweden’s journey in offsite construction began post-WWII, steadily growing into a primary method over decades.

At a high level, the industrialisation of Sweden’s construction sector followed five (5) overarching stages:

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Following the early introduction of offsite construction technology, a significant housing need emerged around the 1950s, leading to the establishment of Sweden’s foundational offsite construction industry. Over the years, coordinated initiatives by government, industry, and academia were launched to enhance efficiency and develop the industry, creating a supportive ecosystem for growth. This ecosystem has enabled Sweden to continue investing in innovation and industry advancement – a key factor distinguishing it from nations struggling to scale in this sector.

Sweden’s success can be traced to pivotal points when government, industry, and academia collectively recognised the sector’s potential and committed the resources needed to make it a reality.

CANADA’S STRUGGLE TO SCALE OFFSITE CONSTRUCTION

Despite a similar post-war introduction to offsite construction as in Sweden, with ‘victory’ or ‘strawberry box houses’, Canada never progressed beyond establishing a foundational industry.

Instead, development stalled due to barriers like consumer and market perceptions of offsite housing safety and quality, regulatory restrictions, and high initial costs.

Today, Canada faces an urgent housing need and must overcome these obstacles to create a thriving offsite construction ecosystem, as Sweden has done. Governments at all levels are committed to initiatives and funding announced across federal, provincial, and municipal levels.

We’re changing the way we build homes in Canada. In Budget 2024, we’re supporting a new approach to construction, with a focus on innovation and technology. The Rt. Hon. Justin Trudeau, Prime Minister of Canada We need to build more homes in this country, and in order to meet the moment, we need to change how we build them…This is an important step toward creating homes at prices Canadians can afford. The Hon. Sean Fraser, Minister of Housing, Infrastructure and Communities
CANADA CAN’T WAIT – COLLABORATION IS KEY

Sweden developed this sector slowly, learning to meet market demands and refining effective models over decades. With Canada’s urgent housing crisis, there isn’t time to build from scratch. Canada’s best path forward is collaborating with advanced sectors like Sweden’s, leveraging its expertise and lessons learned.

Sweden’s success rests on four key factors, most of which can be categorised among the following four areas:

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Strong, consistent collaboration across all parties, early knowledge sharing and dialogue across the value chain, a commitment to innovation and specialisation, and prioritising sustainability with carbon impact assessments – these factors set Sweden’s industry apart and created a thriving environment for growth.

Thanks to this foundation, Swedish companies have developed advanced solutions with the potential to significantly accelerate Canada’s industry growth.

In early 2024, Business Sweden launched an initiative to support collaboration between Sweden and Canadian stakeholders in this sector, including a two-part webinar series and a June forum in Toronto, where Swedish experts connected with Canadian leaders in industrial construction.

Want to know more? Join Business Sweden at the World Trade Centre in Stockholm on December 10th, 2024, or at the Lindholmen Science Park in Gothenburg on December 12th, 2024, to meet the Canada team and hear more about the industrialised construction market in Canada. Register here.

Contact us today to learn what opportunities await in Canada and catch up on what you missed at the links below.

Watch the Webinar: Canada’s Opportunity HERE.

Watch the Webinar: Sweden’s Success Story HERE.  

Watch the Presentation: Sweden’s Housing Policy Landscape HERE.