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Pedestrians walk past a social housing construction project in Vancouver on Feb. 23.Tijana Martin/The Globe and Mail

British Columbia’s NDP government has poured billions of dollars into creating new homes as part of its effort to improve the affordability of housing, the biggest financial pain point for many residents of the province.

But as the seven-year-old government heads for a fall election, it is facing significant difficulty in making a difference that is visible to voters. That’s despite huge amounts of money promised this year and in previous years, including in this week’s provincial budget, as well as a slew of new legislation aimed at encouraging denser housing in cities.

“We’re leaving no stone unturned in terms of building the housing that we need,” Premier David Eby told a Greater Vancouver Board of Trade gathering on Friday afternoon. “But there’s a basic math challenge that we’re facing here in the province, which is dramatic population growth and the housing supply is not keeping up with it.”

In 2018, then-premier John Horgan promised 114,000 new affordable homes would be built within 10 years. The new housing units were supposed to be aimed at students, singles, seniors and families. They were to include a range of different economic models, from supportive housing to market rentals.

But the province has a long way to go before it meets that goal. From 2018 until the end of 2023, provincial investments and policies had resulted in the completion of 47,695 affordable homes. There are another 17,968 under construction, the B.C. Ministry of Housing said this week in a statement. Another 12,255 units are in their planning stages, the statement said.

B.C. has invested $5.2-billion in housing since the New Democrats formed government under Mr. Horgan in 2017, and is still on track to create the promised number of housing units, the statement said. Last year’s budget committed a further $12-billion over the next decade.

Mr. Eby has repeatedly promised to increase housing supply through existing programs and the newly announced BC Builds initiative, a middle-income housing program that the federal government is supporting with $2-billion in low-cost financing.

The new homes have been slow to materialize for a multitude of reasons.

Projects have spent years hung up in approval processes in some cities. Some have been snarled by complications with meeting the affordability rules of different funding agencies.

Some projects that were approved in the first call for proposals six years ago are only now under construction. For instance, a 154-unit Vancouver Land Trust building at Burrard and Davie streets just began site preparation recently. In Victoria, Pacifica Housing hopes to have its long-awaited 88-unit project on Cecelia Road open by this December.

The province had about 50,000 housing starts in 2023, the highest in at least a decade. Even so, the value of building permits for all residential developments in B.C. decreased by 18 per cent last year, to just shy of $15-billion, after two years of record highs. Since permits are an indication of future construction, this suggests building will likely dip in coming years.

Meanwhile, housing remains scarce. The Canada Mortgage and Housing Corporation reported in January that Vancouver’s rental vacancy rate was a minuscule 0.9 per cent.

Many developers, including some non-profit housing organizations, have put a pause on projects, blaming high interest rates and construction costs.

Interest rates are a particular frustration for the Premier, who has argued that the Bank of Canada’s strategy of raising borrowing costs to cool inflation is working against everything his government is trying to do, and doing more damage in B.C. than anywhere else.

“The developers who would build this rental housing are seeing construction financing charges going through the roof, making it impossible for them to build,” Mr. Eby told reporters earlier this week. “I know what’s driving inflation in British Columbia, and it’s interest rates.”

Economic analysts agree that interest rates are affecting shelter costs.

“Interest rates are what is hanging over the housing market,” said Marc Lee, an economist at the Canadian Centre for Policy Alternatives. “When you factor in all the mortgage renewals at higher rates, that’s 2 per cent of GDP. That’s a lot of headwind.”

Another thing slowing down Mr. Eby’s housing push is that developers are reconsidering their previously approved projects in the area around Vancouver’s future Broadway subway, and near the city’s transit hubs, because of policy changes that may now allow them to build more densely. Some are considering applying for larger buildings.

Another issue is a labour shortage.

Bill Ferreira, executive director of BuildForce Canada, a national industry group created two decades ago with federal money to track construction trends, said he is hearing from contractors all around the province that they aren’t taking on new jobs because they aren’t sure they can find the workers needed to complete the work on time.

Mr. Ferreira said domestic recruitment and training is needed, but that there also needs to be a large infusion of immigrant workers to replace retirees.

While permanent residents make up just over a quarter of Canada’s overall work force, they represent only 18 per cent of the workers on construction sites, he said. That’s in part because many construction professions are excluded from Ottawa’s Express Entry program for skilled immigrants, he added.

“If we’re not able to access our share of permanent residents in the quantities that we need to supplement our work forces and our domestic recruitment efforts, we’re going to continue to fall further and further behind. What are acute labour shortages today could turn to chronic labour shortages in the future,” he said.

Although the province and the federal government have handed over hundreds of millions of dollars to B.C. cities in the past year to help them speed up their planning and permitting processes, there is no way of knowing how fast that will happen.

Still, B.C.’s efforts have received widespread praise, including from Prime Minister Justin Trudeau, who addressed Mr. Eby directly earlier this week at an announcement of the federal government’s $2-billion contribution to the BC Builds program.

“Premier Eby, thank you for stepping up with such a strong vision on the provincial side, understanding that what is good for B.C. ends up being good for the entire country,” Mr. Trudeau said. “You are taking real action to address the challenges people are facing in their daily lives.”

BC Builds is aimed at spurring construction of new housing projects on various types of government land. The program aims to have up to 10,000 housing units built after three years. Mr. Eby and his Housing Minister, Ravi Kahlon, have suggested the province’s efforts will bring down construction times for BC Builds projects to 18 months and under.

Some who work in the non-profit housing sector are also supportive of what the B.C. government has been doing. The province’s other initiatives include money spent on subsidized housing and a new fund to help non-profit housing groups buy older apartment buildings.

The province has offered money for people to renovate their basements into suites, it has imposed rules on municipalities to ensure fourplexes can be built on lots previously reserved for single-family homes, and it has clamped down on short-term rentals. In this week’s budget, the government announced it would introduce a flipping tax on homes sold within two years of purchase.

“This province is leading the way in Canada,” said Thom Armstrong, executive director of the Co-op Housing Federation of B.C. and head of the non-profit development organization Community Land Trust.

Mr. Armstrong said the province’s efforts have helped bring new federal money to the table just as financing from the federal Rental Construction Financing Initiative was drying up.

But others are more critical.

BC United Party Leader Kevin Falcon, whose party has flagged housing policy as a key election issue, has been dismissive of the NDP’s efforts, saying they have achieved little real change.

He announced the first plank in his party’s election platform on Feb. 15, framing it as a plan to “fix the NDP’s housing crisis.”

Mr. Falcon’s housing proposals include a new rent-to-own program that would require developers of new housing to set aside up to 15 per cent of homes in participating projects for first-time buyers. Eligible participants would live in their new homes, paying market rent for three years, and then those payments would be converted into down payments.

Other elements of the BC United plan are similar to the NDP’s, but broader. BC United would eliminate the property transfer tax for first-time buyers on properties valued up to $1-million – a higher threshold than the one outlined by the NDP in Thursday’s budget.

The government has increased the threshold to $835,000, with the first $500,000 entirely exempt from the tax. That would mean savings of up to $8,000 for buyers – less than half of the savings that BC United says their plan would provide.

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