As the British Columbia government tries to tackle the issue of housing affordability, increasing the supply of homes has become a key focus. In the last few weeks, we saw this reflected in the Government Budgets, which proposed measures to relieve some of the upward pressure on prices. What does this look like in terms of actual numbers? New housing supply always comes with a lag time. The implementation of new policies and regulations today means that people may not actually be able to move into their new homes for another 3-5 years. When we consider the impact of the pandemic on the supply of housing, we see that the shutdowns of the economy and cities have had a significant effect. Although the shutdowns were implemented for other reasons, the potential impact may now becoming more evident.
One indicator of the increasing supply of new homes is the BC Housing new registries report. However, the report shows that total new home registrations are down 36.6% in 2023 compared to 2022. Despite this, the Central Okanagan accounts for 23.2% of the total new housing supply, which includes 552 multi-unit buildings and 40 new homes, even though the fastest growing community in Canada only represents 5% of BC's total population.
With a population of just under 5.4 million, BC is trying to increase its’ housing supply. The BC Budget proposed removing red tape at the municipal level to expedite the process of building new homes. However, it takes time to acquire a site, prepare it for construction, and complete the building process, especially for multi-family builds. As such, the reports from BC Housing are not encouraging. When looking at the enrolments (housing that will be coming on the market in the next few years), multi-unit enrolments are down 42%.
We are now just seeing the change in new homes being built for ownership. In the first quarter of 2023, 3,746 purpose-built rental units were registered in B.C. However, compared to the same period in 2022, the number of registered rental units decreased 27.2%. With the negative trends in overall housing supply, we can expect a continued upward trend in both housing and rent prices.
What does this mean for home owners or even a home buyer looking to get into the market?
While the government is taking measures to increase the supply of housing in British Columbia, the lag time between implementation and actual availability means that the impact of these measures will not be seen for several years. In the meantime, the downward trend in housing supply will likely continue to push housing and rent prices higher. If you have an option, I would get into the market sooner than later as the numbers do not support affordability in the short run. I hope everyone has a great week and reach out if you ever have any questions! -Mark and Maddie