Construction on new B.C. homes saw small dip in 2024

B.C. saw nine per cent fewer houses begin construction in 2024 than in 2023, but a lead housing economist says it was still a strong year. 

The drop was steeper in certain major centres, such as Vancouver and Victoria, while other urban areas, such as Kelowna, swung in the opposite direction.

The data, released this week by the Canada Mortgage and Housing Corporation (CMHC), comes amid a backdrop of a nationwide housing crisis.

In B.C., the provincial government has sought to address the problem with specific policies. This includes mandating that 30 different municipalities build a certain number of new rental units each year and legislating increased housing density.

A "housing start" is logged on the day that construction begins on a home, according to CMHC. Its data shows there were 47,894 housing starts in 2023, and 43,573 in 2024.

B.C. Housing Minister Ravi Kahlon said the number of housing starts in 2023 was a record, so the small dip seen last year doesn't worry him.

"We know there's a lot more work to do and we're hoping that now that the interest rates are coming down, that the supply will start to increase with that," he said.

WATCH | Decline in B.C. housing starts:

Decline in B.C. housing starts bucks national trend

1 day ago

Duration 2:18

The latest numbers released by the Canadian Mortgage and Housing Corporation show housing starts were up by two percent in Canada in 2024. However, housing starts in B.C. were down nine per cent compared to the previous year. Builders say inflation and financing are to blame.

Kelowna rises

Shiva Moshtari Doust, CMHC's lead economist for B.C., agreed the drop from 2023 to 2024 doesn't mean last year wasn't a strong one. 

"[Housing] start numbers for 2024 were still really high," she said.

There were 43,215 housing starts in 2019, and in 2014 there were 26,741. 

Some areas that saw the largest slump in starts in 2024 were Vancouver and Victoria, where construction dropped by 15 per cent and 16 per cent, respectively, compared to the previous year.

It was a different story for Kelowna, which saw a 28 per cent jump in starts in 2024, Moshtari Doust said, while Kamloops was up 21 per cent.

Although housing starts are down in B.C., there was a two per cent increase nationally in centres with a population of 10,000 and over, with CMHC recording 227,697 units last year compared to 223,513 units in 2023.

Interest rates make big difference

Jay Minhas, the managing director of Elegant Developing, said interest rates and permit waits are among the biggest challenges when it comes to building new homes.

When interest rates are low, the amount of money spent while the lot is sitting empty and waiting for an approval is more manageable than when interest rates are high, Minhas said.

The key interest rate in Canada dropped in 2020 to 0.25 per cent after the start of the COVID-19 pandemic. It then rose over the next couple years, reaching five per cent in 2023. By the end of 2024, it came down to 3.25 per cent.

Minhas said high interest rates and high inflation have made it so banks are "very, very tight" when it comes to lending.

"Developers are facing a really hard time ... [but] with interest rates coming down, that's a big help," he said.

CMHC, a federally funded agency, releases totals for annual housing starts in January each year.