The next half-decade will be a crucial period for the province's housing supply
To compensate for further depletion of housing supply, the rate of housing construction in British Columbia needs to increase by at least 25% above its historical average level over the next five years, according to the BC Real Estate Association.
This accelerated pace will complete an unprecedented 43,000 new homes per year during that half-decade period. This volume will help offset the likely surge in demand that will come about due to the federal government’s immigration targets over the next few years, the BCREA said.
“BC will welcome an estimated 217,500 new permanent residents from 2023 to 2025 or 100,500 more new permanent residents than would be expected based on historical average immigration levels,” the BCREA said. “This translates to a 20,500-unit increase in housing demand from new permanent residents.”
The BCREA expressed scepticism towards the foreign buyer ban’s ability to lower home prices during its two-year effectivity.
“The demand impact of the increase in immigration is approximately five times as large as the foreign buyers’ ban and is estimated to place significant upward pressure on home prices,” the BCREA said. “As the population continues to grow and global migration patterns persist, it is essential to create policies and programs that support and welcome immigrants while addressing the consequent pressures on an already stressed housing market.”
Brendon Ogmundson, chief economist at the BCREA, said that lower prices will help income growth catch up to housing values, ultimately fuelling more sustainable market conditions.
“In our simulations, an appropriate supply response can offset the negative impact on affordability from an immigration-driven demand shock – and if sustained, can achieve a permanent improvement in affordability in BC,” Ogmundson said.