B.C.'s decline in housing permits is 'not encouraging', expert says

As British Columbians struggle to find housing, the new numbers will provide little comfort.

The monthly average of newly approved units in British Columbia fell to about 4,000 in 2024 from around 4,500 in 2023. The average monthly value of building permits is $1.2 billion in 2024, compared to $1.4 billion in 2023.

“The trend is not encouraging,” said Brendon Ogmundson, chief economist at the British Columbia Real Estate Association. “We have big housing goals to achieve and the sooner we can get units into the development pipeline the better.”

Leospalteholz, a Victoria-based housing analyst, said B.C. has generally done better than other provinces in new construction projects, but he expects a decline.

Both Ogmundson andspalteholz point to high interest rates for the slowdown, with Ogmundson also pointing to labor costs and general market conditions.

“We know there will be some challenging times ahead given interest rates and global inflationary pressures,” said Ravi Kahlon, British Columbia’s housing minister. “We are in a perfect storm.”

So what can the government do to reverse the trend?

“(Given that almost all development is done by the private sector and tariffs, labor costs and market conditions are not favorable, there is little the government can do other than what it is already doing, and that is a lot.) “Increase “The pace of new construction,” said Ogmundson.

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Ogmundson was referring to provincial legislation introduced later in 2023 to increase housing supply by increasing density, speeding up the zoning and permitting process and setting ambitious housing targets for municipalities.

But several municipalities, most recently Vancouver, are struggling to meet these Housing Supply Act goals.

The law requires Vancouver to build nearly 29,000 net new housing units within five years, reflecting historical trends. However, according to a staff report, the township created 1,607 net units between October 2023 and March 2024 – well below the annual goal of 5,202.

Spaltholz said if the government wants to keep construction numbers high, it needs to counteract the increased costs by reducing investment risk elsewhere more quickly. These steps could include reducing development costs or community contributions; expedite rezoning, permitting and building code reform to reduce delays and costs; and counteract the market slowdown through increased non-market construction activity.

Regarding the situation in Vancouver, Kahlon said the government is ready to do more, but also called on municipalities to implement laws introduced in the fall so they can meet their housing goals.

“Without this work, it will be difficult for any community to achieve its goals,” he said.

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The decline in the number and value of permitted units reflects an overall decline in construction activity.

The total value of all types of construction fell by 24.3 percent in March 2024 compared to February 2023 and by 35.1 percent in March 2024 compared to March 2023.