Finances

November 6, 2025 Published by British Columbia Chapter - By Nicole Daniels

Building In BC: How Rising Construction Costs Are Reshaping Strata Budgets In 2025

From CCI BC Strata Connection Magazine, Volume 05, Fall/Winter 2025

British Columbia’s housing and construction markets entered 2025 with cautious momentum. While some provinces are seeing a significant slowdown in building activity, BC continues to push forward, driven by strong population growth, persistent housing demand, and billions of dollars in infrastructure investment.

For strata corporations, these forces present both opportunity and risk. Higher demand supports a property’s market value, but it also pushes up construction and reconstruction costs, directly influencing the insurance coverage required to protect a building. The replacement value of a property isn’t just a hypothetical number; it’s the figure that determines whether the strata will have enough financial protection in the event of a catastrophic loss.

BC’s Cost Climate: Stable, But Still Climbing

According to Altus Group’s 2025 Canadian Cost Guide, one of several sources used to determine current construction costs, residential construction in Vancouver (up to 12 storeys) now averages $330–$405 per square foot—a modest increase from last year but still among the highest in the country.

While the national residential construction output dipped roughly 3% in 2024, BC’s cost growth is holding steady due to:

• High population inflows: BC welcomed over 130,000 new residents in 2024, intensifying competition for housing.
• Tight land supply: Urban centres like Vancouver and Victoria face geographic limits that drive up both  land and development costs.
• Stricter building requirements: BC’s Energy Step Code and seismic safety measures add complexity, especially for high-density projects.

In the first half of 2025, residential construction costs in BC have already climbed between 4% and 6%, while non-residential projects have increased 3% to 5%. Looking ahead, projections point to total cost growth of 4-10% for residential construction and 3-7% for non-residential, with the current trajectory suggesting results at the higher end of these ranges.

The Tariff & Supply Chain Wild Card

Despite local manufacturing options, BC remains exposed to global material price swings. Recent U.S. and Canada trade tensions have renewed concerns over potential tariffs on steel and aluminum, which would ripple through core building materials like rebar, aluminum framing, and mechanical systems.

Though only 8% of construction costs come from US imports, when suppliers expect volatility, they often scale back inventory, creating longer lead times and potential project delays. For stratas, that can mean higher bids and extended repair timelines, especially during unplanned restoration work.

Labour: The Cost Driver No One Escapes

Labour shortages remain one of the sector’s biggest challenges. BuildForce Canada forecasts almost 300,000 retirements in the trades over the next decade, with few new apprentices to replace them.

This extends project timelines and drives up wages. Labour already makes up 20–40% of project costs, and wage growth is set to outpace most other industries in 2025. Competition for skilled workers further pushes overall construction costs higher.

For stratas, this means:

• Planned capital projects may require larger budgets than forecasted.
• Outdated values that fall below co-insurance thresholds could trigger penalties, forcing the strata to self-fund part of a claim or rebuild.

Rising labour costs widen the gap between actual rebuilding costs and insured values, increasing the likelihood of underinsurance and penalties, and making them more costly.

Weather Disasters: Adding Pressure to the System

In 2024, severe weather events across Canada caused a record $8.5 billion in insured losses, with BC’s 2023 wildfire season among the most destructive ever recorded. Flooding in the Fraser Valley and extreme storms on Vancouver Island add further strain to the province's already limited resources. 

These events have two key impacts:

• Immediate demand spikes: After a disaster, labour and materials are redirected to affected areas, raising costs province-wide.
• Insurance market tightening: Insurers are becoming more cautious, increasing premiums and requiring up-to-date, detailed appraisals to confirm coverage levels.

In 2025, BC home insurance premiums rose 5.89%, one of the highest increases in Canada, adding roughly $592 annually to insurance costs, compared to 10 years ago.

Market Activity & Infrastructure Competition

While overall building permits in Canada trended downward in early 2025, BC’s data tells a more nuanced story. Multi-family and rental housing permits remain relatively strong in Vancouver, Victoria, and Kelowna, despite higher financing costs putting the brakes on some condo projects.

Current major construction projects in BC total $170 billion in value, up $10 billion since spring 2024 and nearly 50% over five years. Large-scale projects drawing on the province’s resources include:

• Broadway Subway Project: Extending SkyTrain service for nearly $3B, completion set for 2027.
• Highland Valley Copper Mine Life Expansion Project: Construction begins this August and is anticipated to create 2900 jobs, spending up to $2.4B by completion in 2028.
• Royal Columbian Hospital Redevelopment: Multi-phase expansion into the late 2020s, costing almost $1.5B.

While essential for BC’s long-term growth, these projects also compete directly with strata restoration work for the same skilled workers and materials.

Practical Steps for Strata Risk Management

Strata councils can’t control construction market trends, but they can plan for them:

• Annual replacement cost appraisals: Under the Strata Property Act, stratas must insure their property for full replacement cost. Best practice is to obtain a professional appraisal annually to stay compliant and protected.
• Climate resilience investments: Investing in wildfire, flood, and seismic protection measures can help reduce long-term insurance costs, while creating a FireSmart environment can minimize damage and claims.
• Reserve fund accuracy: Proper funding and aligning reserve studies with current market rates help prevent unexpected shortfalls.
• Monitor policy changes: Regulations, building codes, and insurance requirements in BC can change rapidly—especially amid today’s volatile construction and climate risk environment. Partner with appraisers and brokers who track these BCspecific changes to keep property valuations and coverage accurate and compliant year-round.

Why This Matters in 2025

Between 2017 and 2025, BC construction costs rose more than 50%, well above the roughly 25% increase in general inflation.

In such a dynamic market, outdated valuations can leave a strata dangerously underinsured.

Staying current with reconstruction costs is essential to protect a corporation’s financial stability after an unexpected loss. Partnering with a qualified appraisal firm provides strata councils with reliable, market-tested data to protect both property and budgets.

Bottom line: Local demand, global supply, labour realities, and climate pressures are driving BC’s building costs. For strata corporations, staying on top of these trends is the only way to ensure adequate protection in 2025 and beyond.

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Nicole Daniels, Senior Manager Business Development, Normac Appraisals
Nicole works with property managers, strata councils, and insurance professionals to ensure accurate reporting and exceptional service. She specializes in complex properties, tailored solutions, and industry education. A former CCI BC Director and CMRAO- and RIBO-accredited speaker, she has delivered seminars and articles for CCI chapters in BC, Manitoba, Ontario, and Nova Scotia. Normac is Canada’s leading provider of insurance appraisals, known for its expert team and commitment to accuracy and service.