Unprecedented Pace of Construction Needed to Offset the Impact of Record Immigration to B.C.
Vancouver, B.C., March 28, 2023 (GLOBE NEWSWIRE) -- To fully offset a deterioration in housing affordability, new home completions in B.C. need to increase 25 per cent above their historical average level for the next five years to a record level of about 43,000 completions per year, a new report has revealed.
According to the latest Market Intelligence report from the BC Real Estate Association (BCREA), two significant federal government policies ? the Foreign Buyers Ban and record-high immigration targets ? will shape housing demand in B.C. over the next three years.
Summary Findings:
- There is weak evidence that Canada's Foreign Buyers Ban will achieve its objective of lowering home prices, with an estimated reduction in home sales of 2,400 units in B.C. over the two-year ban.
- B.C. will welcome an estimated 217,500 new permanent residents from 2023 to 2025 or 100,500 more new permanent residents than would be expected based on historical average immigration levels. This translates to a 20,500-unit increase in housing demand from new permanent residents.
- The demand impact of the increase in immigration is approximately five times as large as the Foreign Buyers Ban and is estimated to place significant upward pressure on home prices.
"Lowering price growth so that income growth can catch up to prices is integral to improving housing affordability in B.C.," says Brendon Ogmundson, BCREA Chief Economist. "In our simulations, an appropriate supply response can offset the negative impact on affordability from an immigration-driven demand shock and if sustained, can achieve a permanent improvement in affordability in B.C."
Immigration plays a vital role in the economy by supporting economic growth, creating job opportunities and bringing diversity to communities. However, as detailed in this report, immigration also adds significantly to housing demand. As the population continues to grow and global migration patterns persist, it is essential to create policies and programs that support and welcome immigrants while addressing the consequent pressures on an already stressed housing market.
"To ease the pressure on the housing market that arises from sudden changes in housing demand, governments can take steps to increase housing supply," Ogmundson adds. "This can include zoning changes to allow for more housing construction, increasing funding for affordable housing programs and providing incentives for developers to build more housing units."
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