B.C. looks to tie housing funding to immigration as record influx of newcomers expected

Provincial housing minister says it will be critically important for housing starts and funding to be in line with immigration numbers.

Home construction in B.C. will need to rise to unprecedented levels to offset the impact of records levels of immigration on the housing market, the B.C. Real Estate Association said in a new report Tuesday.

The BCREA estimated the province will need to build 25 per cent more homes than it has been averaging and sustain this for the next five years in order to keep a check on rising prices.

The association said construction needs to be ramped up to a record 43,000 housing completions a year as demand for housing is fuelled by rapid population growth. Canada is aiming to accept half a million new permanent residents by 2025 to cope with an extremely tight labour market and the need for people with certain skills, experience and education.

This demand will be happening at the same time that the supply of housing is curbed not only by the weaker economic outlook, but also Ottawa’s restrictions for non-Canadian buyers, said the BCREA.

“While this pace of construction is close to that achieved from 2020 and 2021, higher interest rates and weaker market conditions make that rate of completion less likely,” the association said.

B.C. Housing Minister Ravi Kahlon said Tuesday ahead of the federal budget release in Ottawa that he is pressing Ottawa to tie funding to build more housing with its goals for increasing immigration.

“I’ve spoken to the federal Minister (of Housing) multiple times, urging them to consider tying their immigration numbers to both housing starts and also (funding for) affordable housing. We know it’s going to be critically important to build that stock for people that are coming (to B.C.), not only the new immigrants, but also the temporary residents that are being recruited to come to Canada. We want those that are coming to be successful.”

Kahlon said before the budget was released he wanted to see a real commitment to housing in the federal budget.

“I talk to my colleagues all across the country and they are all saying that housing pressures are a major issue (and) they’re hoping the federal government steps up.”

Lowering price growth so incomes can catch up to prices is also integral to improving housing affordability, said Brendon Ogmundson, chief economist with BCREA.

While the BCREA report noted how population growth puts stress on the housing market, it also noted the importance of positive impacts of immigrants to the economy.

“Immigration plays a vital role in the economy by supporting economic growth, creating job opportunities and bringing diversity to communities,” it said.

On Monday, a day before the BCREA report was released and ahead of Tuesday’s federal budget, Ottawa eased several restrictions on foreigners buying residential property that had been passed in June 2022 and came into effect in January 2023.

The amendments, which are effective immediately, allow non-Canadians who are authorized to work in Canada to buy one property if they have 183 days or more left on their permit.

This also allows vacant land for residential and mixed use to be purchased by non-Canadians and to be used for any purpose, including residential development, and they change the definition of a non-Canadian buyer, allowing for an increase in the control of a private company by a foreign entity from three to 10 per cent.

Local real estate agent Steve Saretsky, who has been among others in the industry drawing attention to the issues ahead of the BCREA releasing its report, said the move by Ottawa would help to increase supply of housing.

“There were developers that couldn’t acquire land because some of their shareholders were American and local development companies often have capital backers from outside Canada,” he said.

Ottawa didn’t commit significant new funds to housing in its budget.

B.C. Finance Minister Katrine Conroy said she’s “disappointed there doesn’t seem to be funding for the housing we have been asking for.”

“We need to be in a partnership with the federal government, municipal governments and our government to ensure that we have enough housing for people in this province.”

The BCREA report said the impact of the increase in immigration due to federal policies is approximately five times as large as the impact of the ban on foreign buyers in curbing demand for housing.

To ease the pressure on the housing market from sudden changes in housing demand, governments can increase housing supply through zoning changes for more construction, increasing funding for affordable housing programs and providing incentives for developers to build more units, the BCREA report said.

With a file from The Canadian Press

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