Budget 2025: What It Means for Housing / Construction

Sector Impact Summary

Housing and construction is one of the most positively impacted sectors in Budget 2025, receiving substantial capital investment increases that will sustain building activity across Alberta. The Alberta Social Housing Corporation (ASHC) sees its total expense increase by $245 million to $641 million in 2025-26, with most of the increase driven by a $221 million jump in capital grants. Over three years, ASHC capital grants total $767 million, an increase of $250 million from Budget 2024, targeting the creation of 6,300 new affordable housing units. The Affordable Housing Partnership Program alone receives $655 million over three years.

The broader construction sector benefits from the total Capital Plan of $26.1 billion over three years -- $1.1 billion more than Budget 2024. This massive public sector building program spans schools ($2.6 billion), health facilities ($3.6 billion), roads and bridges ($2.5 billion), LRT ($2.9 billion), and municipal infrastructure ($7.5 billion), creating sustained demand for construction labour, materials, and services across the province. Private sector construction activity adds further demand, led by Dow's $11.6 billion Path2Zero project reaching peak construction in 2026.

Residential construction activity remains a bright spot. Housing starts are forecast at approximately 43,000 units in 2025, moderating from the surge of almost 48,000 in 2024 but remaining robust by historical standards. Alberta surpassed all other provinces in per capita housing starts in 2024. Residential building permits are hovering around an eight-year high, and real residential investment is forecast to rise about 6% in 2025. The primary risk to the construction sector is tariff-driven cost inflation, particularly from 25% tariffs on steel and aluminum and a weaker Canadian dollar making imported materials more expensive.

Key Budget Measures

Affordable Housing Partnership Program: $655 million over three years ($157M, $204M, $293M). An increase of $250 million from Budget 2024, supporting the goal of creating 13,000 affordable housing units. The program partners with private and non-profit housing providers. (Source: Fiscal Plan 2025-28, Capital Plan, p.97)

ASHC total capital grants: $767 million over three years. Expanding housing options for seniors, families, and individuals. Since 2021, 3,301 units have been built under the Stronger Foundations affordable housing strategy. (Source: Fiscal Plan 2025-28, Expense, p.80)

Continuing Care Capital Program: $649 million over three years ($178M, $200M, $271M). Supports the new Assisted Living Alberta agency with continuing care facility construction and renovation. (Source: Capital Plan Details by Ministry 2025-28)

Seniors Lodge Modernization Program: $150 million over three years ($50M annually). Includes $50 million in new funding to upgrade and modernize seniors lodge facilities. (Source: Fiscal Plan 2025-28, Capital Plan, p.97)

Affordable Housing Strategy: $113 million over three years ($38M annually). Includes $21 million in new funding to maintain government-owned social housing buildings. (Source: Fiscal Plan 2025-28, Capital Plan, p.97)

Indigenous Housing Capital Program: $92 million over three years ($42M, $25M, $25M). Includes $25 million in new funding addressing housing needs in Indigenous communities. (Source: Capital Plan Details by Ministry 2025-28)

Budget 2025 new affordable housing units target: 6,300 units over three years. Combined with the 3,301 units built since 2021 under the Stronger Foundations strategy. (Source: Fiscal Plan 2025-28, Capital Plan, p.97)

Housing starts forecast: approximately 43,000 units in 2025, moderating to 41,000 in 2026 and 37,800 by 2028. (Source: Fiscal Plan 2025-28, Economic Outlook, p.35)

Funding Changes

Item	2024-25 Forecast	2025-26 Estimate	Change
ASHC total expense	$396M	$641M	+$245M
ASHC capital grants	~$255M	$476M	+$221M
Affordable Housing Partnership (vs. Budget 2024)	N/A	$655M / 3yr	+$250M
Seniors, Community and Social Services total	$9,770M	$10,603M	+$833M
Housing starts	~48,000	~43,000	-5,000 units

(Source: Fiscal Plan 2025-28, Expense, p.79-80; Economic Outlook, p.35)

Capital Investment

The Seniors, Community and Social Services capital plan totals $1,935 million over three years ($532M, $656M, $747M), heavily weighted toward housing and continuing care:

Affordable Housing:

• Affordable Housing Partnership Program: $655M ($157M, $204M, $293M)
• Affordable Housing Strategy: $113M ($38M annually)
• Indigenous Housing Capital Program: $92M ($42M, $25M, $25M)
• Seniors Facilities and Housing Capital Maintenance: $130M ($42M, $43M, $46M)
• Seniors Lodge Modernization: $150M ($50M annually)

Continuing Care:

• Continuing Care Capital Program: $649M ($178M, $200M, $271M)
• Good Samaritan Society Continuing Care (Edmonton): $63M ($50M, $13M)
• Bethany Continuing Care Centre (Calgary): $57M ($46M, $11M)
• Pine Grove Manor: $16M (2025-26)

Construction Demand from Other Capital Plans:

• Total Capital Plan: $26.1B over three years creates massive construction demand
• Education (schools): $3.3B capital
• Infrastructure (health, government facilities): $3.4B capital
• Transportation (roads, bridges, LRT): $8.5B capital
• Major private projects: Dow Path2Zero $11.6B reaching peak construction in 2026

(Source: Capital Plan Details by Ministry 2025-28; Fiscal Plan 2025-28, Economic Outlook)

Risks

Construction cost inflation from tariffs. Rising costs for building materials due to U.S. tariffs -- especially 25% on steel and aluminum -- will increase per-unit construction costs and potentially reduce the number of affordable housing units, continuing care beds, and other structures that can be built within budget allocations. A weaker Canadian dollar makes imported materials more expensive.

Housing starts moderation. Housing starts are forecast to moderate from 48,000 in 2024 to approximately 43,000 in 2025, 41,000 in 2026, and 37,800 by 2028. Federal immigration targets reducing population growth will slow housing demand over the medium term.

Construction labour shortages. The sheer scale of public and private construction activity ($26.1 billion government capital plus billions in private industrial projects) will create intense competition for skilled construction workers, potentially driving wage inflation and project delays.

Purpose-built rental viability. While rental vacancy rates remain historically low, moderating population growth and increasing supply could eventually reduce the investment case for new purpose-built rental units, potentially slowing private sector housing investment.

Opportunities

Massive affordable housing investment. The $767 million ASHC capital program targeting 6,300 new affordable housing units represents a step-change in government commitment to housing affordability. The $250 million increase over Budget 2024 in the Affordable Housing Partnership Program signals sustained priority.

Resilient residential construction. Housing starts remain robust at approximately 43,000 in 2025 amid solid population growth and falling borrowing costs. Residential building permits are hovering at eight-year highs. Alberta led all provinces in per capita housing starts in 2024.

Non-residential construction boom. The $26.1 billion Capital Plan, combined with major private projects (Dow Path2Zero reaching peak construction in 2026, health facilities, LRT), creates a sustained wave of non-residential construction activity through at least 2027.

Lower interest rates supporting housing demand. The policy rate is forecast to decline, supporting mortgage affordability. Longer amortization periods for first-time homebuyers will further support demand. The new 8% personal income tax bracket provides up to $750 per individual, improving household purchasing power.

Real residential investment growth. Real residential investment is forecast to rise about 6% in 2025, supported by an elevated number of dwelling units under construction and renovation spending expected to recover from a sharp 2024 decline.

Continuing care facility expansion. The $649 million Continuing Care Capital Program supports the new Assisted Living Alberta agency, creating construction demand for care facilities that also address the growing seniors housing need.

What's Missing

The budget does not include a specific construction materials procurement strategy to mitigate tariff impacts on building costs. There is no fast-tracked permitting or regulatory streamlining program to accelerate affordable housing construction timelines. The budget lacks a dedicated construction workforce development program to address the skilled trades shortage that will constrain capacity. There is no mention of modular or prefabricated housing programs that could reduce per-unit costs and construction timelines for affordable housing. There is no specific allocation for housing in rapidly growing communities outside Edmonton and Calgary where population pressures are particularly acute.

Net Assessment

Housing and construction is among the strongest sectors in Budget 2025, benefiting from both substantial affordable housing investment increases ($767 million ASHC program, up $250 million) and the broader $26.1 billion Capital Plan that drives construction demand across the province. Residential construction remains robust at 43,000 forecast housing starts, and major industrial projects sustain non-residential activity. The dominant risk is that tariff-driven construction cost inflation, particularly from 25% steel and aluminum tariffs, will erode the purchasing power of these record capital allocations.