Housing Minister Ravi Kahlon thinks Metro Vancouver will be able to go against the grain of Canada Mortgage and Housing Corporation’s new projections that forecast a decline in new housing starts in the year ahead.
CMHC’s projections are due to “restricted financing” impacting multi-family building – restrictions that the corporation says will bounce back in 2025 onward.
While CMHC recorded 33,244 new housing starts last year, forecasts for 2024 range from a low of 25,900 to a high of 31,900.
“High land and construction costs, along with financing constraints, are making it hard for some multi-family projects to move forward,” the corporation’s report reads. “We anticipate these multi-family projects to account for most of the decline in new home constructions in 2024.”
On Thursday (April 4), Kahlon said the figures are based on interest rates.
“We have said that rising interest rates are putting real pressure on a lot of housing projects throughout Canada,” he said. “We are confident though that we will surpass targets given that we are taking steps to unlock small-scale, multi-use units, unlock transit-oriented development and I do believe that B.C. will continue to lead the country in housing starts.”
B.C. recorded 50,490 new housing starts in 2023, which is the highest in Canada per-capita. The province also added a record-number of new rental homes in 2023.
Kahlon argued that the projections do not reflect policy changes the NDP government has made.
“We believe that the changes we brought on will allow for more housingstarts to be happening in B.C.”
CMHC is less confident about seeing an immediate effect and suggests that zoning policy changes may pave way for more higher density developments but also “ground-oriented multi-family developments.”
Rents will remain high in Metro Vancouver, the corporation warned.
“We expect that turnovers will continue to be low, as existing renters have limited alternatives in the rental market,” the forecast reads.
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Housing prices are also expected to pick up, ending a declining trend in benchmark pricing that began in 2022. Reasons include expectations around lower interest rates: Once they start to decline, buyers will see their budgets expand, leading to growing demand and rising prices.
That also means that with interest rates expected to ease starting in mid-2024 through 2025, multi-family projects will become more financially viable.
CMHC’s forecast is the latest and second major report this week analyzing housing in B.C.
A report released April 2 by RBC chief economist Robert Hogue stated an “improving outlook for affordability” in some areas of the province, while conditions remain challenging in Metro Vancouver and Victoria.
“The prospects for buying a home have long been challenging in the area,” that report reads. “They’re now at full-blown crisis levels. It’s never been as expensive to own a home anywhere, anytime in Canada as it was in Vancouver in the fourth quarter.”
RBC suggests that the share of a median income needed to cover ownership costs is 106.4 per cent. Victoria is somewhat more affordable with the share being 80.2 per cent.
Kahlon said the RBC report highlights what is already known: Rising interest rates, global inflation and decades of inaction by governments have put people in a “really, really tough time” in B.C., he said.
“That’s why we are taking steps to increase housing…in fact, we are national leaders,” he added in pointing out that governments elsewhere are copying B.C.’s policies.
When asked when British Columbians can expect a change, Kahlon said addressing the housing crisis take time and real reforms.
“If we can flip a switch and solve the housing crisis and address all the challenges overnight, we certainly would.”