Greater Victoria has unsold condos and fewer new projects moving forward. What could that mean for future housing supply?

Industry participants described a strata ownership market in a prolonged confidence and feasibility reset. Investor demand has largely withdrawn, end-user presales are difficult to secure, completed inventory is moving slowly, and the gap between achievable revenues and total project costs is preventing new projects from proceeding.

The product that remains most resilient is sharply priced, ground-oriented housing and highly specific premium product for equity-rich downsizers, while the broad mid-market and smaller investor-oriented condominium segments are the weakest.

The central risk is a future ownership supply shortfall. Current activity is supported mainly by projects already under construction, while weak launches, difficult presale financing, rising government-related costs and regulatory uncertainty are delaying the next wave of projects.

Participants stressed that modest price reductions have not restored absorption because the constraint is not price alone. Purchaser confidence, deposit capacity, interest-rate uncertainty and limited flexibility after purchase are all material.

These findings reflect observations shared by UDI Capital Region members during an October 2026 roundtable.

Key Findings: Greater Victoria's Strata Ownership Market

Participants identified four key concerns:

• Investor demand has largely withdrawn, particularly for smaller investor-oriented condominium units.
• Buyer confidence remains weak, and modest price reductions have not restored sales activity.
• Presale financing requirements are preventing some projects from proceeding, putting future ownership supply at risk.
• Ground-oriented townhomes and premium homes for downsizers remain comparatively resilient, while the broader condominium market struggles.

Why Greater Victoria's Condominium Presales Are Struggling

Industry participants identified weak new-project launches as a future supply risk, while current construction activity is increasingly led by rental housing.

Victoria data presented during the discussion showed declining condominium construction and elevated purpose-built rental activity. As of September 2026, more than 2,000 permitted units in the Victoria CMA had not yet started construction.

Completed and unabsorbed condominium inventory remained elevated, with significant concentrations identified in Langford and Saanich.

The presale condominium market was described as extremely weak, particularly for concrete high-rise and smaller investor-oriented units.

Market demand is increasingly bifurcated. The strongest remaining segments are value-oriented ground-oriented housing and highly specific premium product for equity-rich downsizers. The broad mid-market was identified as particularly difficult.

Smaller one-bedroom condominium units are challenging because the investor buyer category has largely withdrawn.

Larger two-bedroom-plus homes can still attract demand in premium locations such as Oak Bay, Fairfield and waterfront settings.

Ground-oriented townhomes on the West Shore were described as comparatively resilient where they offer more space at a competitive total price.

Demand Remains Limited by Confidence, Financing and Flexibility Concerns

Investor demand has largely disappeared from the presale market. Participants linked this to weak expectations for appreciation, challenging rental economics and reduced flexibility in how privately owned units can be used.

Equity-rich downsizers remain one of the more active buyer groups, particularly for larger and premium products. Participants also identified single purchasers across a broad age range as an active segment in some projects.

First-time buyers, younger households and move-up purchasers are more constrained by mortgage uncertainty, large deposits and, for existing owners, the need to sell another home.

Buyer confidence, rather than price alone, was repeatedly identified as a central issue. Purchasers are delaying decisions while they wait for greater certainty about interest rates and whether prices have reached the bottom.

Participants said regulatory changes and restrictions affecting rental use can further reduce confidence because buyers value the ability to adapt if their circumstances change.

How Presale Financing Affects New Housing Construction

Presales remain a critical financing condition. One financing participant described illustrative structures in which 30% presales supported about 65% leverage, 40% presales supported about 70% leverage, and 50% presales supported about 75% leverage.

Achieving presale thresholds is difficult when the buyers available are primarily end users. A developer reported being able to reach approximately 30% presales through intensive marketing but characterized requirements closer to 50%–60% as a significant barrier.

Lenders are also examining the quality of existing presales, including when contracts were signed, whether purchasers are arm's-length buyers and whether contract pricing remains supportable in the current market.

Purchaser deposits of 15%–20% were identified as another barrier, particularly for younger or move-up buyers who cannot easily fund a deposit while retaining their existing home.

Some projects are being structured with an option to convert to rental if condominium sales are insufficient, but this only works where unit size, cost basis and achievable rents support rental economics.

Construction cost pressure is only one part of the feasibility problem. Participants repeatedly identified municipal charges, taxes, financing costs, building-code changes and accumulated regulatory requirements as additional constraints. These concerns are consistent with findings from UDI's Altus study, which examined the cumulative impact of government-imposed costs on housing development in Metro Vancouver.

The central supply concern is that projects not launching today will reduce the ownership pipeline in future years.

Unsold Condominium Inventory in Greater Victoria

Participants identified Langford as having one of the largest concentrations of completed and unabsorbed units in the region.

Participants cited examples from the West Shore of completed condominium inventory remaining unsold for extended periods after occupancy. In one example, approximately 30 units remained available two years after completion despite pricing that was reportedly at least 15% below original levels. Further modest price reductions were not described as materially improving sales activity or buyer interest.

Better-capitalized developers may choose to carry inventory rather than discount aggressively. Strategies discussed included waiting, inventory loans, lender extensions and rental where the economics permit.

Participants cautioned that smaller or more leveraged developers have less ability to wait and therefore face greater pressure from carrying costs and weak absorption.

How Rental Housing Is Affecting the Ownership Market

Softening rents, rental incentives and new purpose-built supply are giving some would-be first-time buyers and young couples a reason to remain renters and defer a major ownership decision.

Purpose-built rental was described as particularly competitive in downtown and corridor locations, where tenants value tenure security and the characteristics of professionally managed rental buildings.

Rental is also becoming an option for some downsizers who value flexibility and reduced ownership obligations.

Participants noted that softer rents weaken condominium investor economics and can also reduce the viability of converting unsold strata inventory to rental.

How Strata Rules Affect Buyer Confidence

The discussion focused much more heavily on changing rules and ownership flexibility than on strata fees, insurance or maintenance costs. No detailed consensus emerged on those three cost categories.

Participants said internal strata bylaws are generally designed around the intended buyer demographic and were not identified as the principal sales challenge.

External rules affecting short-term rentals, rental management, rent increases and future personal use were described as reducing the flexibility buyers associate with owning a condominium.

This flexibility issue was considered particularly important for downsizers committing substantial home equity who may later need to travel, assist family, address health needs or otherwise change how they use the unit.

Regulatory complexity and repeated policy change were identified as broader warning signs because they add uncertainty for both buyers and developers.

Why Today's Slow Market Could Create Tomorrow's Housing Shortage

The discussion pointed to a combined demand, financing, cost and confidence problem in the Capital Region strata ownership market. Investor withdrawal has weakened the presale model, while end users face large deposits, financing uncertainty and concerns about flexibility after purchase. At the same time, project costs and financing requirements limit developers' ability to reduce prices enough to restore broad absorption. The result is a near-term inventory challenge occurring alongside a material risk that too few ownership projects will enter the pipeline for future delivery.

Market Indicators to Watch

Participants identified several indicators that could help assess how the market develops:

• Whether permitted "pending starts" actually convert into construction starts.
• The volume of new condo launches and the future ownership pipeline, not only units already under construction.
• Presale velocity, deposit capacity and lender confidence in existing presale contracts.
• Completed and unabsorbed inventory, carrying costs and distressed pricing, particularly in Langford and the West Shore.
• The timing of future purpose-built rental completions and the resulting direction of rents and incentives.
• Performance differences between small one-bedroom units, mid-market condominiums, family-oriented townhomes and premium downsizer product.
• Changes to municipal charges, servicing obligations, building codes and other regulatory requirements.

About This Article

This article summarizes market observations shared by UDI Capital Region members during an October 2026 roundtable. The observations reflect participants' experiences as of October 20, 2026.

The findings do not represent official UDI policy positions, recommendations or endorsements. Certain project-specific details have been generalized to protect participant confidentiality.

Leah Bell is Regional Director of UDI Capital Region at the Urban Development Institute.