BC Check-Up: Investment climate shows strength in housing construction, but challenges in economic growth and major projects

By Jack Blackwell, Economist
Apr 9, 2024
BC Check-Up: Investment climate shows strength in housing construction, but challenges in economic growth and major projects

VANCOUVER, April 9, 2024 – According to BC Check-Up: Invest, an annual report by the Chartered Professional Accountants of British Columbia (CPABC) on investment trends across the province, construction began on 47,894 housing units in 2023, marking a record high.

"B.C. faced a challenging investment climate in 2023, as higher interest rates and inflation impacted affordability," said Lori Mathison, FCPA, FCGA, LLB, president and CEO of CPABC. "Despite these challenges, residential building investment remained strong, particularly in high density units."

Of the total housing units started, 40,866 or 85.4 per cent were attached units, such as condos, apartments, and townhomes, representing a 20.3 per cent increase from 2022. Non-residential building investment reached $7.9 billion, up 6.5 per cent from 2022, with a notable increase in investment in institutional and governmental projects, particularly healthcare facilities.

However, B.C.’s major project inventory was valued at $373.0 billion in Q3 2023, down 4.2 per cent compared to Q3 2022. The LNG Canada Facility ($36.0 billion) project remained the largest in the province, and was approximately 85 per cent complete as of December 2023.

"With many of the larger “mega projects” approaching completion, and a weaker pipeline in the proposal stage, major project activity is expected to slow in 2024" noted Mathison. “That said, interest rates are expected to come down later this year relieving some of the burden associated with high borrowing costs.”

B.C.’s annual inflation rate continued to moderate in 2023, after reaching a 40-year peak in 2022. As of February 2024, provincial consumer price growth was 2.6 per cent year-over-year, sitting within the Bank of Canada’s target range. The Bank of Canada maintained a policy interest rate of 5.00 per cent through the most recent decision on March 6, 2024.

The effects of higher interest rates reverberated through the economy in 2023, as real economic growth is expected to come in around 0.9 per cent, with even weaker growth of 0.5 per cent forecasted for 2024.  At the same time, population growth is expected to outpace economic growth in the short-term.  Real GDP per person is expected to fall 2.2 per cent in 2023, and a further 2.3 per cent in 2024 before stabilizing in 2025.

"As B.C.'s economic output is expected to flatten in 2023 with a weak outlook for 2024, it's crucial to prioritize policies that boost capital investment and address the affordability challenges faced by residents," continued Mathison.

The report also highlights the impact of government spending and record capital investment on provincial debt. B.C.'s taxpayer-supported debt-to-GDP is projected to rise from 17.6 per cent in 2022-23 to 27.5 per cent in 2026-27, representing an increase of $54.6 billion in taxpayer-supported debt.

"The provincial government announced a significant spending package in their 2024/25 budget,” concluded Mathison. “The three-year plan released by the government marks a significant departure from past fiscal planning. Prioritizing a clear strategy towards a balanced budget is essential to maintaining the province’s ability to address future challenges.”

To learn more, see www.bccheckup.com.

For more information:
Jack Blackwell, Economist

About CPA British Columbia

The Chartered Professional Accountants of British Columbia (CPABC) is the training, governing, and regulatory body for over 40,000 CPA members and 6,000 CPA students. CPABC carries out its primary mission to protect the public by enforcing the highest professional and ethical standards and contributing to the advancement of public policy. CPAs are recognized internationally for bringing superior financial expertise, strategic thinking, business insight, and leadership to organizations.