The provincial government released BC Budget 2026 in mid-February, and while budgets rarely make for light reading, this one carries some important implications for housing across British Columbia.

For homeowners, buyers, and anyone watching the real estate market closely, several of the measures introduced this year raise broader questions about affordability, housing supply, and the long-term direction of policy in our province.

A Budget Introduced in a Challenging Economic Moment

The budget arrives at a time when the provincial economy is facing uncertainty and slower growth. As expected in that environment, the government has projected a sizable deficit.

While deficits themselves are not unusual during uncertain economic cycles, economists have pointed out that the budget does not yet outline a clear path to returning the province’s debt levels to a more sustainable trajectory. Over time, rising debt-service costs can reduce the government’s flexibility — limiting its ability to provide tax relief or fund new initiatives.

For those of us who work closely with housing every day, the bigger question is how policy decisions today shape the future supply of homes across the province.

The Supply Question: A Key Concern

One of the central challenges in British Columbia’s housing market remains housing supply. Population growth continues, while new home construction has already begun to slow in some areas due to rising costs and economic uncertainty.

The concern expressed by industry economists is that several measures introduced in the budget may further increase the cost of building new homes — at a time when encouraging development is widely viewed as critical to improving long-term affordability.

According to BC Real Estate Association Chief Economist Brendon Ogmundson:

“There is unfortunately not a lot to like from either a macroeconomic or housing perspective in this budget… doing so on the back of an already struggling housing sector will ultimately prove to be self-defeating.”

Key Measures That Affect Real Estate

Several policy changes introduced in the budget directly affect those who own property, develop housing, or invest in residential real estate.

1. Higher Additional School Tax on Higher-Value Homes
Beginning in 2027, the province will increase the Additional School Tax applied to residential properties assessed above $3 million.

The new rates will be:

• 0.3% (up from 0.2%) on assessed value between $3M–$4M

• 0.6% (up from 0.4%) on assessed value above $4M

This tax applies to most residential property types including detached homes, townhomes, condominiums, and vacant residential land. For mixed-use buildings, it only applies to the residential portion of the assessed value.

On the North Shore — where property values frequently cross the $3M threshold — this change is likely to affect a meaningful number of homeowners over time.

2. Speculation and Vacancy Tax Increase
The Speculation and Vacancy Tax will also increase beginning in 2027.

For foreign owners and untaxed worldwide earners, the tax rate will rise from 3% to 4% on the assessed value of the property.

The intent of the tax is to encourage homes to be occupied rather than left vacant. However, some economists argue that higher taxes on foreign ownership may also discourage investment capital that could otherwise support new housing construction.

3. Rising Development Costs
Other measures within the budget — including changes affecting taxation on development land and the application of provincial sales tax to certain professional services related to housing — may increase what developers refer to as “soft costs”.

Those costs are typically passed along within the final price of new homes.

In practical terms, that means policies intended to improve affordability can sometimes have the opposite effect if they increase the cost of building housing in the first place.

Why This Matters for the Market

Housing markets are influenced by many forces — interest rates, population growth, economic conditions, and policy decisions.

While the immediate impact of the 2026 budget will likely be modest, policies affecting development costs and investment can shape the housing landscape over the coming years.

In a province where demand for housing remains strong, many economists believe the long-term solution lies in increasing the supply of new homes across all price ranges.

Our Perspective

From what we are seeing on the ground here on the North Shore, the spring market is already beginning to take shape.

Buyers remain active, inventory is gradually increasing, and well-priced homes are continuing to attract strong interest. Policy changes like those introduced in this budget tend to influence the market gradually rather than overnight.

What matters most for homeowners and buyers is understanding the broader direction of the market — and how changes like these may affect long-term planning.

As always, if you have questions about how new policies may affect your home, your property taxes, or the broader market, we are always happy to help you make sense of it.

No pressure — simply here as a resource whenever you need it.

In Budget 2026, the Government of British Columbia proposed a significant change to the Property Tax Deferment Program—primarily affecting the interest rate structure on deferred taxes.

Here is a clear breakdown of what changed.

1. Higher Interest Rate on Deferred Property Taxes

Beginning with taxes deferred for the 2026 taxation year and onward, the interest rate on deferments will increase to:
Prime rate + 2%, compounded monthly.

This applies to both:

• the Regular Program (typically for homeowners 55+, surviving spouses, or people with disabilities), and

• the Families with Children Program.

Previously, the two programs had different interest structures and generally lower rates tied to government borrowing costs.

2. Interest Will Now Compound

Another important change:

• Interest on new deferments will compound monthly, rather than being simple interest.

This means interest is charged not only on the original deferred tax amount but also on accumulated interest, increasing the long-term cost of deferment.

3. Existing Deferred Taxes Are Not Affected

Amounts already deferred before 2026 will remain under the previous interest terms and are not retroactively changed.

Only new deferrals starting in 2026 will use the updated rate and compounding method.

4. What the Program Still Does

The program itself remains the same structurally:

• It allows eligible homeowners to delay paying annual property taxes.

• The Province pays the tax to the municipality.

• The deferred amount becomes a loan secured against the property title, typically repaid when the home is sold or transferred.

✅ In practical terms:

• The program still provides liquidity for homeowners (especially seniors).

• However, the cost of using the program will be noticeably higher going forward due to the higher rate and compounding interest.

Many seniors on the North Shore use this program to stay in their homes. The change effectively moves the deferment loan closer to market borrowing rates, which may influence whether homeowners defer taxes or pay them annually.

Credit Source: Ryan Bacchus, Certified Financial Planner (CFP) and Associate Financial Advisor & Reg Sangha, Financial Associate & Advisor at RGF Integrated Wealth Management

Each January, homeowners across British Columbia receive their annual property assessment, and with it often comes confusion. Many people wonder: Is this what my home is really worth? The short answer is — not necessarily.

Assessed Value vs. Market Value

In British Columbia, property assessments are prepared by BC Assessment and reflect market value as of July 1 of the preceding year. That timing is critical.

A REALTOR®’s opinion of value reflects today’s market conditions, while your assessment is based on a snapshot from roughly six months earlier. In changing markets, this timing gap can create noticeable differences between assessed value and current market value.

Why Assessed Values and Market Values Differ

There are two main reasons:

1. Mass appraisal methodology
BC Assessment uses a mass appraisal system. Values are derived primarily from MLS® sales data within neighbourhoods or strata complexes, rather than individual property inspections. This broad approach is effective for taxation purposes but does not account for unique features, renovations, condition, or micro-market influences.

2. Time lag
Your 2026 assessment reflects estimated market value as of July 1, 2025 — not today. When markets shift, assessed values may lag behind real-time pricing.

What Assessments Are Really For

Market-value assessment is widely considered the fairest way to distribute the property tax burden across homeowners. However, it is important to understand that assessed value is not designed to be a precise indicator of what your home would sell for today.

Key Definitions

• Market Value:
  The price expected if a reasonable amount of time is allowed to find a purchaser, and both buyer and seller are fully informed.

• Assessed Value:
  The most probable price an unencumbered property would have sold for on the open market as of July 1 of the preceding year.

What’s Happening With 2026 Assessments

According to BC Assessment, the cooling housing market is now being reflected in 2026 values. Many homeowners across the Lower Mainland are seeing assessed value decreases ranging from 0% to approximately 10%, based on July 1, 2025 valuations.

In response to these changes, the British Columbia Ministry of Finance has also adjusted the B.C. Homeowner Grant threshold for the first time in six years. For 2026, the threshold has been reduced to $2.075 million, down from $2.175 million last year, aligning with lower assessed values across Metro Vancouver.

Why This Matters to You

A lower assessed value does not automatically mean lower property taxes, as taxes are determined by municipal budgets and tax rates. However, assessments do affect eligibility for programs such as the homeowner grant and provide insight into broader market trends.

If you are considering selling, refinancing, or simply want to understand your home’s current value, an assessment should be viewed as one data point — not the full picture.

As always, we are happy to provide a current market evaluation and context specific to your property and neighbourhood.