New housing construction in British Columbia has hit a significant slump, with the latest figures from Statistics Canada showing a steady decline. In September 2024, B.C. saw 3,163 housing units created—a drop from 3,895 units in August and far below the year’s high of 7,128 units in April. The six-month average now stands at approximately 3,783 units, reflecting challenges in maintaining consistent growth.One area of concern for housing experts is the decline in multi-unit developments, crucial for addressing B.C.’s housing needs. Brendon Ogmundson, Chief Economist with the British Columbia Real Estate Association, has flagged this trend, noting that multi-unit dwellings are currently being constructed at a six-month average pace of 3,500 units as of September. While not disastrous, these numbers fall short of what’s needed to meet the province’s ambitious housing goals.“Interest rates and market conditions have been major barriers over the last two years,” said Ogmundson. “But with interest rates now falling and market conditions improving, we may see these trends begin to reverse over the next year.”
Declines Across Key Regions
Major urban centers have experienced sharp declines. In the Vancouver Census Metropolitan Area, only 1,658 new residential units were recorded in September, marking a nearly 49% drop compared to the same month in 2023. Similar downward trends were seen in Victoria, Nanaimo, and Kelowna, highlighting the widespread impact across the province.The Role of High Interest Rates
This decline in new construction reflects the challenging conditions of 2023 and much of 2024, when interest rates reached historic highs. The Bank of Canada’s overnight rate, which influences many financial instruments, hit 5% in June 2024—the highest in over two decades. This high rate made borrowing for developers and homebuyers more expensive, cooling housing activity across the board.However, the Bank of Canada began easing rates in mid-2024, with cuts in June, July, September, and October. These reductions are starting to create a more favorable environment for developers and buyers alike, sparking hope for a construction rebound in 2025.Looking Ahead
While current trends may seem bleak, Ogmundson is cautiously optimistic. Falling interest rates and improving market conditions could encourage developers to ramp up construction projects, particularly for multi-unit dwellings. Whether this potential uptick will be enough to meet B.C.’s housing demand remains to be seen.As housing policy and market conditions evolve, all eyes will be on 2025 to determine if B.C. can overcome this slump and rise to the challenge of providing much-needed housing.Source: Penninsula News Review