Budget 2025: What It Means for Homebuilders

The Bottom Line

Alberta's housing market remains a bright spot in Budget 2025. Housing starts are forecast at 43,000 units in 2025, supported by lower interest rates and continued population growth. The Affordable Housing Partnership Program grows by $250 million to $655 million over three years with a target of 13,000 affordable units. The overall $26.1 billion Capital Plan supports an average of 26,500 direct and 12,000 indirect construction jobs annually. However, U.S. tariffs could increase material costs, and housing starts are expected to moderate to about 41,000 units per year by 2026-27.

Top Measures That Affect You

1. Housing starts forecast at 43,000 units in 2025, down from an annual pace of almost 48,000 in 2024 but still historically robust. An elevated number of dwelling units currently under construction provides an additional pipeline boost. Starts are forecast to moderate to about 41,000 units per year by 2026-27.

2. Affordable Housing Partnership Program at $655 million over three years, an increase of $250 million from Budget 2024, with a goal of creating 13,000 affordable housing units. This represents a significant new construction pipeline for builders who partner with housing providers.

$26.1 billion Capital Plan over three years, up $1.1 billion from Budget 2024. This supports roughly 26,500 direct and 12,000 indirect jobs annually through 2027-28. Major construction categories include schools ($2.6 billion), health facilities ($3.6 billion), roads and bridges ($2.5 billion), and housing ($1.1 billion).

$150 million over three years for the Seniors Lodge Modernization Program, including $50 million in new funding. Lodge modernization and construction represents a specialized niche for residential builders.

$2.6 billion over three years for school construction, an increase of $505 million from Budget 2024. The School Construction Accelerator Program aims to deliver over 200,000 new and modernized student spaces, creating sustained demand for construction contractors.

$113 million for the Affordable Housing Strategy (maintenance of government-owned social housing), plus $92 million for the Indigenous Housing Capital Program. These represent additional construction and renovation opportunities.

New 8% income tax bracket saves your employees up to $750 per year, helping with workforce retention in a competitive construction labour market.

Direct Financial Impact

Construction demand: The combination of 43,000 housing starts, $26.1 billion in public capital spending, and multiple affordable housing programs creates a robust demand floor. Even as housing starts moderate from the 2024 peak, activity remains well above historical averages.

Affordable housing pipeline: The $655 million Affordable Housing Partnership Program over three years, targeting 13,000 units, represents an average of roughly 4,300 units per year. If your firm can partner with housing providers and non-profits, this is a significant new contract pipeline. Since 2021, 3,301 affordable units have been built under the Stronger Foundations strategy, and the budget projects 6,300 more over the next three years.

Material cost risk: The budget assumes 15% U.S. tariffs on all goods (excluding energy at 10%) with Canadian retaliation. If tariffs persist, imported building materials (lumber, steel, fixtures, mechanical systems) could see price increases that squeeze your margins. The budget does not include specific mitigation for construction material cost inflation.

Labour market: Construction employment may be held back in the near term as tariff uncertainty slows some investment decisions. However, the skilled trades pipeline at $135 million per year and the Capital Plan's sustained construction demand should maintain a healthy workforce. The $1 million Trades and Apprenticeship Promotional Plan aims to attract young people to construction trades.

Interest rates: The 10-year Government of Canada bond rate is forecast at 3.10%, down from 3.30%. Lower rates support homebuyer demand and reduce financing costs for developers. Federal housing measures, including those for first-time homebuyers, will also support demand.

Population growth: Alberta's population is growing at 2.5% (approximately 5 million people), which continues to drive housing demand. While growth is slowing from the 4.4% rate in 2024-25, it remains strong relative to other provinces.

Service Changes

School Construction Accelerator Program (SCAP): An additional $618 million over three years advances 22 school projects, plus $150 million for modular classrooms and $62 million for planning and design of 30 new schools and eight modernizations. Homebuilders with capacity for institutional construction should watch for procurement opportunities.

Health infrastructure: $3.6 billion over three years for health facilities, including new continuing care centres, recovery communities, surgical capacity, diagnostic imaging, and EMS facilities. This represents diversification opportunities beyond residential construction.

Continuing Care Capital Program: $769 million for continuing care transformations, including facilities operated by Assisted Living Alberta. This includes new construction and renovation of care facilities.

Infrastructure ministry: Building and maintaining public infrastructure, with total expense at $921 million in 2025-26. The Real Property Governance Act gives Alberta Infrastructure first-of-refusal on government land sales, which may affect land availability in certain areas.

Capital Maintenance and Renewal: $3.8 billion over three years for CMR across all facility types, including $131 million for housing and seniors' facility preservation. Renovation and maintenance contracts represent a steady pipeline.

Safety codes system: Municipal Affairs continues to oversee the safety codes system. No specific changes to building codes or inspection processes are announced, but the ministry's capacity is being maintained.

What's Missing

No tariff mitigation for building materials: Despite the assumption of 15% tariffs on imported goods, the budget does not include a program to offset increased material costs for homebuilders or construction firms.

No land supply acceleration: The budget does not include provincial measures to accelerate land assembly, rezoning, or permitting for residential construction, which remain municipal responsibilities. The Real Property Governance Act may actually slow disposal of government-owned lands by requiring first-refusal processes.

No construction workforce immigration program: While the Alberta is Calling bonus is funded, there is no construction-specific immigration stream or credential recognition program for skilled trades workers from other countries.

No purpose-built rental incentive: The budget notes purpose-built rental construction is expected to stay strong, but does not introduce a provincial tax incentive or direct subsidy for purpose-built rental development beyond the affordable housing programs.

No modular or prefab incentive: Despite the expansion of the Modular Classroom Program for schools, the budget does not include incentives for modular or prefabricated construction in residential or affordable housing.

Insurance and liability costs: The budget notes rising insurance costs for schools and public facilities but does not address construction insurance cost pressures faced by homebuilders.

Key Dates

Date	What Happens
January 1, 2025	New 8% tax bracket takes effect for employees
April 1, 2025	New fiscal year; Capital Plan spending begins
2025	Housing starts forecast at 43,000 units
2025-26	Affordable Housing Partnership Program ramps up
2025-26	SCAP advances 22 school projects
2025-26 to 2027-28	$26.1B Capital Plan rolls out
2025-26 to 2027-28	$655M Affordable Housing Partnership target: 13,000 units
2025-26 to 2027-28	$150M Seniors Lodge Modernization
2026-27	Housing starts moderate to ~41,000 units/year

Where to Get Help

Affordable Housing Partnership Program: Contact the Alberta Social Housing Corporation for partnership opportunities and procurement processes. Visit alberta.ca/affordable-housing.

School construction procurement: Contact Alberta Infrastructure or the relevant school board for SCAP and modular classroom program procurement opportunities.

Seniors Lodge Modernization: Contact the Alberta Seniors and Community Housing Association for lodge construction and renovation opportunities.

Skilled trades and apprenticeship: For workforce development information, visit tradesecrets.alberta.ca.

Invest Alberta Corporation: For large-scale development investment support, visit investalberta.ca.

Capital Plan details: Ministry-specific project and program funding at alberta.ca/budget-documents (2025-28 Capital Plan details by Ministry).

Safety codes: Contact Municipal Affairs for building code and inspection information.