B.C. housing starts fell last year. Industry leaders fear trade war will make it worse

Finance Minister Brenda Bailey said B.C.’s residential construction slowdown was partly due to “elevated interest rates, skilled labour shortages, and increasing construction costs”

Housing construction in B.C. has slowed down more than the provincial government’s earlier projections, and the trade war has industry leaders skeptical about prospects for a quick rebound.

The 2025 B.C. budget released Tuesday shows housing starts in the province fell by 9.2 per cent between 2023 and 2024, a deeper drop than the government’s prediction from a year ago.

The province now expects housing starts to increase 1.6 per cent year-over-year for 2025 (totalling 46,500 units) and 2.7 per cent for 2026 (47,800 units). Both of those numbers are below 2023’s record high level of housing construction, the budget says, but above B.C.’s 10-year historical average.

These numbers are concerning, but “not surprising, and it’s just going to get worse,” said Anne McMullin, CEO and president of the Urban Development Institute, a real estate development industry association. Depending on the details of how Canada retaliates to the U.S. government’s tariffs, the cost of home construction may increase further, McMullin said.

“These are difficult, difficult times,” she said.

The real estate development industry accounts for roughly a quarter of B.C.’s gross domestic product and more than 200,000, McMullin said. A further construction slowdown would “have an impact on jobs, on the economy, and GDP, let alone the ability of people to find a home that they can live in,” she said Tuesday.

In Tuesday’s budget speech, Finance Minister Brenda Bailey said the construction slowdown was partly due to “elevated interest rates, skilled labour shortages, and increasing construction costs.”

Jock Finlayson, chief economist for B.C.’s Independent Contractors and Businesses Association, said: “The budget’s forecasts for starts in 2025-26 are dubious in the midst of an unprecedented trade war with our largest commercial partner.”

“With a tariff war raging, actual starts will almost certainly come in lower,” Finlayson said.

The budget also predicts substantial increases in the value of home sales (a 15.9 per cent boost for 2025 and 6.7 per cent in 2026). But, Finlayson predicted, “these forecasts will not be realized if the tariff war persists.”

ICBA president Chris Gardner said the housing numbers in Tuesday’s budget are “very concerning.”

“Despite a myriad of taxes and government spending, not only have they failed to increase the supply of new homes, the number of new homes built is decreasing,” Gardner said.

“We simply cannot tax and regulate our way to more affordable housing,” Gardner said, adding that the province should focus on policies to help the private sector build more homes faster and work with municipalities to fund infrastructure and “help take some of the burden off cities struggling to deal with growth.”

The overall value of residential building permits, which is considered a leading indicator of home construction, declined 8.3 per cent over the first 11 months of last year, while the number of homes permitted fell by 10.8 per cent. The value of residential permits declined last year in the Vancouver, Kelowna and Nanaimo metro areas, while it grew in the Victoria, Abbotsford and Kamloops areas.

The province also announced other housing related changes in Tuesday’s budget:

• Speculation and vacancy tax: The province will increase the speculation and vacancy tax, which it applies to residential properties that are vacant for more than half the year in 59 designated regions of B.C.

Starting next year, the rate for foreign owners increases from 2 to 3 per cent of the home’s value, and the rate for Canadian citizens and permanent residents doubles from 0.5 to 1 per cent. These increases are expected to generate an additional $47 million in revenue for the 2027-28 fiscal year, which will go into housing investments in the regions where the tax applies.

• Rent supplements: The province is also making changes to enable more lower-income seniors and working families to receive help with the cost of rent. The income threshold for the rental assistance program will increase from $40,000 to $60,000, which the province says will nearly double the number of working families eligible for support, from 3,200 families to almost 6,0000. The average supplement families receive will increase from $400 to $700 per month.

Also, about 1,600 additional seniors will be able to access the Shelter Aid for Elderly Renters, or SAFER, program with the province increasing the income threshold from $37,240 to $40,000. The average supplement seniors receive through SAFER will increase from $261 to $337 per month. These changes are expected to cost $375 million over the next three years.

These increased supports will be “helpful” but are only “incremental,” said Alex Hemingway, a senior economist with B.C. Policy Solutions, a new progressive think-tank. “Those are not going to move the needle on the housing crisis.”

• Middle-income rental housing: The budget also provides an update on B.C. Builds, the housing program introduced last year by the B.C. NDP pledging $198 million over three years to build new homes for middle-income renters.

Six projects have now begun construction with 11 more expected to be underway by the end of next year, totalling almost 1,400 homes in different parts of B.C. The new budget adds $318 million over the next three years to support B.C. Builds.

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Read more of our B.C. Budget 2025 coverage: