The Canada Mortgage and Housing Corporation (CMHC) suggests a slowdown in Metro Vancouver new home construction is on the horizon, alongside a potential increase in housing market activity.
New home starts in the region reached 33,244 in 2023 for all housing types. The Crown corporation expects starts this year to fall between a low of 25,900 or a high of 31,900, according to an April 4 housing market outlook.
“High land and construction costs, along with financing constraints are making it hard for some multi-family projects to move forward,” said the report.
“We anticipate these multi-family projects to account for most of the decline in new home constructions in 2024 but are expected to rebound as monetary policies ease in 2025. Construction activity is forecasted to return to previous levels by the end of 2025, driven by the persistent high demand for housing in Vancouver.”
The construction of single-family homes is expected to decrease from 2,832 new homes recorded in 2023 to between 2,200 and 2,600 starts.
This decline is due to space limitations across the region and the potential to make less profit when compared to higher-density housing types.
While single-family home starts could reach a projected high of 3,300 in 2025, single-family construction is not expected to exceed the peak level recorded in 2022—at 3,392.
Though new home construction may slow this year, CMHC said it anticipates resale activity and home prices will pick up thanks to increased immigration “and a stable economic environment boosting housing demand.”
Metro Vancouver recorded 35,590 sales across all property types in 2023 with an average sale price of $1,216,697, according to the CMHC report.
Sales are expected to increase in 2024 to as high as 46,200 sales before the end of the year.
“Apartment units will account for an increasing share of resales. Part of this is due to the continued shift in construction activity, with increasing numbers of condominium units being completed each year. More resales will be multi-family units based in the South Fraser region,” said the CMHC report.
Average home prices are projected to range between a low of $1,127,000 and a high of $1,258,000. Over the long-term, CMHC said that pricing could reach “new highs by 2026” with the highest projection being $1,446,000.
“Price growth in 2024 will not be equal across all housing types. As mortgage rates fall, the most affected buyers will be those seeking lower-priced homes. These homes are further away from the city core, in the North and South Fraser regions,” said the report.
“Following lower mortgage rates in 2025 and 2026, single-detached home prices will grow faster.”
The average rental price for a two-bedroom unit in Metro Vancouver is also expected to increase from 2,181 in 2023 to 2,380 by the end of the year thanks to persistently strong demand.
“As mortgage rates decline, some households that transition from renting to homeownership may alleviate some rental demand. However, if immigration to British Columbia, which is absorbed by Vancouver, remains at levels seen in recent quarters, it will continue to put pressure on the rental market, as immigrants are more likely to be renters,” said the report.
