Average rents across Metro Vancouver soared 6.2 per cent to an aggregate $1,385 per month in 2018 as a negligible increase in the region’s vacancy rate kept the market tight, the Canada Mortgage and Housing Corp. reported Wednesday.
“This represents the fourth consecutive year the average rents have increased by more than the provincially allowable (rent) increases,” the report said, “which suggests that landlords, through turnover of long-term tenants, are able to increase rents to market levels that are higher.”
The turnover rate of rental properties remained stable in 2018 with some 14 per cent of units changing tenants, CMHC market analyst Eric Bond said in an interview, but the agency’s annual survey found considerable differences between rents that tenants are paying in occupied units versus rents landlords are asking for vacant units.
On average, the rents being asked for vacant two-bedroom apartments in the city of Vancouver hit $2,593 per month, some 32-per-cent more than the $1,960 being paid by existing tenants in 2018, according to the survey.
Across all unit types in Vancouver, rents being sought at turnover were 20 per cent higher, at $1,766 per month, compares with the average rent of $1,476 per month for occupied units.
Burnaby had the lowest differential between vacant and occupied units with the overall average of $1,356 per month being asked for on turnover 10 per cent higher than the $1,235 average rent for occupied apartments.
Overall, Bond said the number of purpose-built rental units across Metro Vancouver increased by almost 800 as of the 2018 survey, but surprisingly the number of condominium apartments being made available for rental declined by just over 1,000.
That might be because some investor owners took advantage of steep price increases for condominiums to sell their units, which took them off the market, Bond said.
For other investors, Bond said it might have been more attractive to use units as short-term rental units, though Canada Mortgage and Housing doesn’t have data to show to what extent this might be taking place.
Across Metro Vancouver, West Vancouver had the highest average rents at $1,620 per month for one-bedroom suites, $2,434 for two-bedroom and $3,621 for three-bedroom suites.
Surrey had the lowest vacancy rate at 0.4 per cent for purpose built rentals and the District of North Vancouver had the highest vacancy rate at 1.7 per cent.
And the Tri-Cities saw the biggest net loss in purpose-built rental apartments, 339 units, followed by Burnaby, which saw a net-loss of 177 units as the result of renovations and demolitions.
Across Canada, demand for rental housing that continued to outpace supply ratcheted the national vacancy rate down to 2.4 per cent in October 2018 from three per cent in the same month a year ago.
Alberta, Saskatchewan, Quebec and the Atlantic provinces all saw their vacancy rates decline, while B.C. , Ontario and Manitoba experienced increases, though B.C.’s rate was barely noticeable.
“The decrease in the vacancy rate was attributable in part to the strong increase in international migration,” said Aled ab Iorwerth, CMHC’s deputy chief economist.
“This factor, combined with the growth in youth employment and the aging of the population, drove up demand for rental housing.”
The agency said international immigration climbed by 23 per cent in the first half of the year, compared with the same period a year earlier, tightening vacancy rates because newcomers often rent when they first arrive.
Real estate analyst Ben Myers said the introduction of a stricter mortgage stress test, along with rising interest rates, can also be blamed for the decline in vacancy rates and rising rents in the country’s biggest cities as more people opt to rent.
The CMHC report, which looked at purpose-built rental units and leased condo apartments, found the average national rent for a two-bedroom apartment jumped by 3.5 per cent to $987 from October 2017 to October 2018. This increase was higher than the inflation rate during this period.
With files from The Canadian Press
More to come