A new report predicts higher housing prices, but also higher vacancy rates in British Columbia in 2025.
The report from the Canadian Mortgage and Housing Corporation forecasts a "mixed picture" for the provincial housing market. The report predicts slower economic growth and fewer immigrants coming to British Columbia will reduce demand for housing.
These trends, however, co-exist with lower interest rates, which will make it easier for British Columbians to borrow money for home purchases. With interest rates dropping, the report expects re-sales of homes to pick up, absorbing unsold inventory and spurring more listings.
"This will result in a hotter market with more upward price pressure. Most of this will be concentrated in 2025 when the effects of lower mortgage rates are likely to manifest," it reads.
Dropping mortgage rates will also help revive construction of single-detached homes in Metro Vancouver and Greater Victoria. But this development may be temporary.
"In the longer term, this type of housing will continue to be scarcer as a lack of new land and the pricing of existing land discourage new supply," the report states.
Overall, the report pegs the average MLS re-sale price for a home in Metro Vancouver between $1.213 million and $1.375 million, and for Greater Victoria between $918,000 and $1.05 million.
The report also contains good news for renters. It expects vacancy rates to stay "historically high" in the next few years after they have been rising in 2024 across B.C.
"A record number of units are under construction as part of efforts to increase rental supply," it reads. "Most of these units will likely enter the rental market in the next few years."
But the report also adds two notes of caution: New rental units will likely fetch high rent, potentially impacting demand; And developers investing in rental units may also pull back in the future as more supply comes online and rent growth slows.
But the report ultimately predicts downward pressure on rents because of the changes in immigration policy. Immigrants are more likely to rent than buy and as fewer arrive, demand and prices would ease.
The report confirms Metro Vancouver as the centre of housing activity in B.C. with re-sales and housing starts predicted to increase. But other markets will also see activity. Victoria will continue to absorb Metro Vancouver residents looking for cheaper real estate and the report predicts higher vacancy rental rates for Greater Victoria than for Vancouver. The 2025 forecast for Metro Vancouver in 2.1 per cent, while Victoria's forecast is 3.1.
Projecting out, the report forecasts a vacancy rate of up to 2.9 per for Vancouver in 2027, with Victoria hitting 3.5 per cent by 2027.
Communities outside Vancouver-Victoria corridor will also draw residents looking to escape high real state prices, with Chilliwack and Kelowna highlighted.
CHMC's report comes with a caveat though.
"Potential trade tariffs from the new U.S. administration may impact the provincial economy, especially on major items like softwood lumber, agriculture and natural gas," it reads. "Stronger tariffs will negatively affect rural communities at first and urban areas afterwards."
B.C.'s Ministry of Housing and Municipal Affairs welcomed the report in a statement.
"Housing starts, particularly rental properties, are expected to increase in areas like Vancouver and Victoria in 2025, which were already above historical averages in 2024 and coming off a record year in B.C. 2023," it reads. "This indicates that our recent legislation to make it easier to build housing of all types, including small-scale, multi-unit housing, and policies that drive rental home construction are contributing to home affordability, lowering costs for people and families during an uncertain economic time."
The statement added that B.C. is starting to see progress with government anticipating more positive outcomes as local government implement new provincial changes.
"At the same time, there is much more work to do, and we are not slowing down," it reads.
