Repeat of the 2010s: B.C. home prices at risk of 27% jump by 2032 due to delayed construction
At the heart of today’s concern is a surge in completed, but unsold new housing units. According to BCREA, the province now has more than 7,000 completed and unsold homes on the market — the highest level recorded since the late 1990s. Condominiums account for nearly two-thirds of this inventory, reflecting the severe slowdown in the pre-sales market.
This buildup follows several years of economic turbulence. High policy interest rates by the Bank of Canada aimed at curbing post-pandemic market inflation weakened housing demand in 2023 and 2024. A tentative recovery was later disrupted by global economic uncertainty and new recession fears, leaving major urban markets — particularly Metro Vancouver — struggling to regain momentum.
In 2025, developers faced mounting project cancellations, bankruptcies, and financing challenges as pre-sales collapsed and government-imposed building development fees continued to rise. With financial institutions and other lenders typically requiring developers to sell 65 per cent to 70 per cent of a new project’s homes during pre-sales in order to access full construction loans, many projects have simply stalled.
“A consistent stream of new supply is vital” for affordability
BCREA notes that while elevated inventories may appear to ease short-term pressure on prices, the resulting slowdown in construction poses a major long-term risk. History shows that housing demand tends to recover, even after prolonged downturns. When it does, insufficient new supply can quickly reignite price growth.
The risk lies in how long it can take to bring new housing supply to market, especially for larger projects.
Large residential projects typically require years to move from initial proposal through design, rezoning, public consultation, financing, and construction. When builders pull back during a downturn, the effects are not felt immediately. Instead, the shortage emerges later — often just as demand recovers — leaving the market unable to respond quickly. This lag between demand and supply is why periods of weak construction frequently precede sharp price increases.
Similarly, residential rents saw a meaningful drop starting in 2025 partly due to the wave of new secured purpose-built rental housing projects reaching completion and occupancy, with the wave of such project completions slated to continue through 2026. With new rental housing supply entering the market, this increased competition and put a downward pressure on rents not seen in many years. Many of these significant projects began construction years ago, during or right after the pandemic.
Another challenge BC faced in the 2010s was a significant shortage of construction labour. Once workforces are scaled back due to fewer projects, it can be very difficult for builders to quickly rebuild skilled trades capacity when demand returns.
“A consistent stream of new supply is vital to the healthy functioning of a housing market, largely due to the concept of vacancy chains. That is, the idea that when new housing is constructed, it provides an opportunity for households to move up into newer, usually more expensive housing, which frees up the older, more affordable part of the housing stock,” reads the report. This is similar to the “filtering” concept of housing.
“Without new construction, the housing market can struggle to absorb new demand and become stagnant with less turnover and fewer options for households. As a result, the supply of homes available for sale dwindles, making home prices vulnerable to even small demand shocks,” continues the report.
BCREA’s forecast suggests that unsold inventory will continue rising through 2026 before peaking. As developers delay or cancel projects, housing construction starts and completions are expected to drop later this decade. Active listings may peak around 2027 before declining as demand returns to historical norms.
Under this scenario, inflation-adjusted home prices could rise by nearly 27 per cent by 2032, with particularly rapid increases toward the end of the decade — a trajectory that closely mirrors the post-2008 experience.
New federal GST exemptions, changes to foreign buyer restrictions, and lower development fees needed
The report argues that preventing another affordability crisis will require new policies on both the demand and supply sides of the market.
On the demand side, BCREA recommends expanding the federal GST exemption on new housing beyond first-time buyers to include all purchasers. Such a move, the report states, would help reduce available inventory and improve the viability of new developments, particularly condominiums and townhouses that are key to densification strategies in Metro Vancouver.
The report also calls for a reassessment of restrictions on foreign buyers in the pre-sale market. While foreign investment in existing homes remains controversial, BCREA argues that allowing non-resident buyers to participate in new construction pre-sales could help projects reach financing thresholds, ultimately increasing supply and strengthening “vacancy chains” throughout the housing market. Such a pivot would be similar to the policies in place in Australia, where foreign buyers are permitted to buy new construction, but not existing supply.
“The decade-long narrative regarding harmful speculation and its effect on home prices must shift towards the realities of how foreign demand can encourage multi-unit development that will benefit all British Columbians,” reads the report.
“Allowing non-resident investment into the pre-sale market for new construction drastically improves the feasibility for all projects due to a wider demand base.”
On the supply side, the report highlights rapidly rising construction and development costs. Construction costs in B.C. have nearly doubled since 2017, driven by higher prices for materials such as concrete and steel. At the same time, development cost charges levied by municipal governments and regional districts have increased, squeezing builder margins and discouraging new projects.
BCREA suggests that governments should offset development cost charge reductions with alternative infrastructure funding and explore tools such as tax-advantaged municipal bonds to lower financing costs and speed up approvals. Essentially, municipal governments could borrow money more cheaply by selling special bonds to investors, helping them build infrastructure without pushing up housing costs.
The report states that while the last few years of relatively flat growth in home prices may offer short-term relief, the underlying market dynamics remain precarious. BCREA asserts governments need to act quickly to reduce unsold inventory and restore consistent construction, which would slow down home price growth — potentially limited to 9.4 per cent by 2032 under the most aggressive policy scenarios, instead of the current forecast of about 27 per cent based on the current trajectory.
“While demand has been weak, mean-reversion is the most powerful force in the statistical universe,” continues the report.
“Simply put, we should not wait for demand to come roaring back to take action.”
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