For years, the story of Vancouver's real estate market has been intrinsically linked to relentless population growth. However, a recent and unexpected development has introduced a new narrative. In the first quarter of 2025, British Columbia experienced its first quarterly population decline in nearly 75 years, a shift that is sending ripples through the housing industry and sparking a critical debate about the future.

While the drop was numerically small—a decrease of just 2,357 residents—its significance lies in the reversal of a powerful trend. This comes after years of unprecedented growth, where BC welcomed over 160,000 new people annually. This standstill, driven by a change in federal immigration policy, is now forcing a conversation about the very foundations of our housing market.

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A Change in Federal Policy and a Cooling Market

The federal government, responding to widespread public concern over housing affordability, has signaled a move away from the ultra-high migration levels of recent years. Prime Minister Mark Carney has spoken of bringing immigration to "sustainable levels," while Conservative Leader Pierre Poilievre has called for "severe limits" to allow housing and infrastructure to catch up.

This policy shift coincides with a natural cyclical downturn in the real estate market. The combination of these factors has created a softening of demand, and the property development sector is now voicing significant concerns about the path forward.

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The Development Industry's Call for a New Approach

Major players in the property development world, including the Urban Development Institute (UDI), are highlighting how the current climate is impacting the creation of new housing supply. According to Anne McMullin, President of the UDI, the Canadian multi-family development model is under strain. This model relies heavily on pre-selling 60% to 70% of a project's units to secure the necessary construction financing.

In a letter to federal Housing Minister Gregor Robertson, McMullin argued that foreign buyers and domestic investors were a "critical component" of the capital needed to meet these pre-sale targets and get new projects built. With these groups largely absent from the market due to measures like the foreign buyer ban, she states the new housing supply pipeline is being "choked off."

This has led to direct calls from industry leaders, including the Rennie Group and Polygon Homes, for the federal government to reconsider its stance. Their proposal is to amend the foreign buyer ban, specifically to allow foreign investment in newly constructed homes as a way to inject necessary capital back into the system and restart stalled projects.

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What This Means for the Vancouver Market

The situation presents a complex puzzle for the future of Vancouver real estate. On one hand, research from Statistics Canada has confirmed the strong link between high immigration rates and rising home values over the past 15 years. A slowdown in population growth could, in theory, help stabilize prices and create a more balanced market for local buyers.

On the other hand, the development industry makes a compelling case that without the capital from investors—both foreign and domestic—the construction of new homes will slow dramatically, worsening the long-term supply shortage.

We are now at a pivotal moment. The federal government must weigh the public's demand for housing affordability against the development industry's warnings about a supply crunch. Their decision on issues like the foreign buyer ban will have a profound impact on market dynamics in the months and years to come.

For buyers, sellers, and homeowners in Vancouver, this period of uncertainty underscores the importance of staying informed. The interplay between population trends, government policy, and development realities will shape the opportunities and challenges that lie ahead.