British Columbia’s housing market is set for a year of mixed results in 2025. While resale activity is expected to rebound after years of slowdown, the rental market will likely experience softening with higher vacancy rates. Meanwhile, new home construction is projected to see only marginal growth as demand for presale units gradually returns.
Regional Overview: How Population Growth is Shaping the Market
Slower population growth in British Columbia is expected to have a significant impact on housing demand. Economic growth is anticipated to be sluggish in early 2025, with employment conditions weakening until mid-year before rebounding in 2026 and 2027. While wages and disposable income have seen strong growth in recent years, they are expected to remain flat in 2025, affecting affordability and purchasing power.
Additionally, changes to Canada’s immigration policy will influence housing demand. Metro Vancouver remains a top destination for international migrants, but overall net migration is expected to slow. Meanwhile, high housing costs will continue driving some B.C. residents to seek more affordable options in areas like Chilliwack, Victoria, and Kelowna. Interprovincial migration trends suggest a growing number of British Columbians moving to the Prairie provinces in search of lower-cost housing.
Resale Market: A Rebound on the Horizon
After two years of declining sales, Vancouver and Victoria’s resale markets are poised for a turnaround in 2025. Lower mortgage rates are expected to expand borrowing capacity, allowing more buyers to enter the market. While sales in 2025 are projected to increase, they will likely remain below the highs seen in 2021.
Recent reductions in interest rates began to impact resale activity in late 2024, with stronger sales compared to the previous year. This trend is expected to continue, leading to increased demand and upward pressure on home prices. However, the effects of slowing immigration will be more pronounced in the rental market than in resale activity, with the biggest impact concentrated in Metro Vancouver.
Home Prices: A Year of Growth Followed by Stabilization
Increased sales activity will help absorb existing inventory in the form of unsold new homes and active resale listings. The average time homes spend on the market is expected to decline slightly after increasing over the past two years. This will contribute to a more competitive market, leading to price growth primarily in 2025, followed by marginal increases in the years beyond.
Higher borrowing capacity—enabled by wage growth and low mortgage rates—will support home price appreciation. Additionally, investor activity is expected to pick up, particularly in the presale market, as expectations for price growth return.
New Home Construction: Modest Growth Expected
Housing starts in Vancouver and Victoria are projected to increase slightly in 2025 after a sluggish 2024. The growth will be led by multi-unit developments, particularly in the rental sector, driven by government incentives and historically tight rental conditions. However, as more rental supply enters the market, developers may become cautious due to rising vacancy rates and slowing rent growth, which could limit new rental projects in the coming years.
Condominium construction remains challenging due to pricing pressures and weaker presale demand. Many projects have been delayed due to high unabsorbed inventory, with developers taking out additional financing to manage existing units. While lower mortgage rates and increased resale activity may help revive stalled projects, demand for high-priced presale units remains uncertain, particularly in Vancouver’s core.
Single-detached home construction is also expected to recover in 2025, supported by lower interest rates. However, long-term growth in this segment will be constrained by land shortages and high development costs.
Rental Market: Higher Vacancy Rates and Slower Rent Growth
The rental market in British Columbia is expected to see a significant increase in vacancy rates after years of historically low levels. This trend began in 2024 and is projected to continue as a record number of rental units enter the market. Many of these units will be priced at higher rents, potentially slowing absorption rates.
Lower population growth, particularly among new immigrants who typically enter the rental market first, will further dampen demand. While rental prices will continue rising due to the introduction of high-priced units, asking rents may face downward pressure as landlords compete for tenants. This could lead to improved affordability and increased tenant turnover as the gap between occupied unit rents and new rental prices narrows.
Key Takeaways for 2025
- Resale Market: Sales activity will rebound due to lower mortgage rates, pushing prices to new highs by the end of the year.
- New Construction: A modest recovery is expected, but long-term growth remains uncertain due to affordability constraints and land shortages.
- Rental Market: Rising vacancy rates and slowing rent growth will ease pressure on renters, though newly built units may struggle with absorption.
- Regional Trends: Metro Vancouver will continue to lead the province in housing activity, while more buyers seek affordability in areas like Surrey, Burnaby, and Victoria.
- Government Policy: The increase in the insured mortgage price limit from $1 million to $1.5 million will boost sales, particularly for townhomes, benefiting dual-income households.
Looking Ahead
While 2025 will bring renewed activity in B.C.’s housing market, long-term challenges remain. Rising inventory levels, affordability concerns, and shifting migration trends will shape the future of real estate in the province. Whether you’re looking to buy, sell, or invest, staying informed on these trends will be crucial in making the right decisions in an evolving market.
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