Despite being tabled the same day as steep U.S. tariffs and Canadian counter-tariffs took effect, the B.C. government’s budget contained a surprisingly steady outlook for the province’s housing sector, with no major contractions forecast.
In the Ministry of Finance’s projections, unit home sales are expected to increase by 13.2 per cent in 2025 and 3.7 per cent in 2026, due to interest-rate cuts and federal changes that increased the $1 million price cap for insured mortgages to $1.5 million, and made 30-year amortizations available to first-time buyers and all new-build buyers.
Further out, the ministry expects home sales to average 1.9-per-cent growth annually between 2027 and 2029.
Meanwhile, the average home sale price is expected to rise by 2.4 per cent in 2025, followed by 2.9 per cent in 2026 and 2.9 per cent annually on average in the medium term.
Factoring in both demand and price, the budget estimates that the total value of home sales in B.C. will increase by 15.9 per cent this year and 6.7 per cent next year.
The 158-page document also examined housing starts, noting the near-term outlook has softened “slightly.”
This reflects “an uncertain cost and investment environment due to restrictive global trade policies as well as lower immigration and slower population growth, which is expected to have an impact on the demand for rental units,” the budget said.
The finance ministry expects B.C. housing starts to total approximately 46,500 units in 2025 and 47,800 units in 2026, below a record high seen in 2023 but above the 10-year historical average of 41,431 seen between January 2014 to December 2023.
Further out, the ministry forecasts that housing starts will average around 49,900 units per year over the 2027-to-2029 period.
“The high level of housing construction is expected to be supported by private- and public-sector investment, legislative actions introduced to encourage more homebuilding in the province, and the federal mortgage rule changes that came into effect in December 2024,” said the budget.
How trade war could impact housing sector
Various experts recently told BIV that U.S. tariffs and Canadian counter-tariffs could squeeze B.C.’s housing sector in various ways.
Steeper import prices for building supplies and components, for example, could hamper a homebuilding industry already struggling with high input costs and thin profit margins.
“If [retaliatory] tariffs are applied to building materials and other construction inputs that we source from the United States, like wire and steel and other specialized components for building products, then that will actually drive up building costs here, which is the last thing we want to do,” said Jock Finlayson, chief economist with the Independent Contractors and Businesses Association.
The Canadian government’s retaliatory measures targeted $30 billion of American goods, including door and window components, sanitary fixtures, locks, dish-washing machines, baths, sinks, showers and floor coverings.
If the trade war causes a prolonged recession and significant unemployment, the province could potentially see more people defaulting on their mortgage payments and other loans.
Strata fees could also rise, because a building’s insurance premiums are likely to increase, as they depend on a building’s replacement cost, which is likely to increase with the higher input costs induced by tariffs.
“The materials to build the building are going to be more, and therefore it’s going to cost more to build a building, and the replacement value is going to go up, so the insurance will go up,” explained Sean Ingraham, board president of Canadian Condominium Institute’s B.C. chapter.
And that’s not to mention the trade war’s impacts on market psychology. After months of uncertainty, the current environment could already be reducing demand and suppressing listings and sales.
“Buyer psychology is changing rapidly based on what’s been presented by politicians, and even if there’s lower [interest] rates … there’s just too much political instability,” said Victor Tran, a Toronto-based mortgage and real estate expert with online marketplace Ratesdotca Group Ltd.
“I don’t think buyers will feel as confident in making one of the biggest purchases of their lives when there’s so much uncertainty from regulators and politicians.”
Budget funds programs, raises speculation tax
Budget 2025 contains various housing-related expenditures that are likely to bolster different segments of the housing market. It boosts funding for the following groups:
Middle-income renters through an additional $318 million over three years for the BC Builds program;
Lower-income renters through expanded eligibility and supplements via the Rental Assistance Program;
Lower-income seniors through expanded eligibility and supplements via the Shelter Aid for Elderly Renters (SAFER) program; and
Homeless encampment residents through an additional $90 million over three years for the Homeless Encampment Action Response Team (HEART) and Homeless Encampment Action Response Temporary Housing (HEARTH) programs.
The budget also hikes the speculation and vacancy tax. Effective January 1, 2026, the rate for Canadian citizens and permanent residents who are not “untaxed worldwide earners” will increase to one per cent from 0.5 per cent of a home’s value annually.
The rate for foreign owners and untaxed worldwide earners will increase to three per cent from two per cent of a home’s value annually.
“We’re cracking down on speculation,” Finance Minister Brenda Bailey told the legislature last Tuesday.
Bailey said her staff has been working at a “fast clip” to prepare for any outcomes of the U.S.-Canada trade conflict.
“I think the uncertainty that [U.S. President Donald Trump] is bringing in is a feature, not a bug, and I do expect it to continue, and this budget was designed with that [uncertainty] in mind,” Bailey said.
“I wish I could have a crystal ball and imagine what the future looks like. What I will say is, this budget allows us the ability to respond.”
