Vigorous economy, migration and hot job picture credited
Derrick Penner
Sun
Greater Vancouver’s apartment vacancy rate edged up to 1.4 per cent in October, compared with 1.3 per cent a year ago, as the region’s rental market stayed in a delicate balance between renters giving up apartments to buy property and new residents coming in to fill the void, Canada Mortgage and Housing Corp. said Thursday.
“On the side of pushing vacancy rates up would be the first-time buyers moving into condominiums,” CMHC housing market analyst Cameron Muir said in an interview.
“The downward pressure is coming from a reinvigorated economy and good job growth that is drawing migrants, both internationally and from other provinces, to the city. And many of them choose to rent before they buy.”
The result, Muir added, is a slightly higher turnover of apartment properties, but the turnover isn’t pushing up vacancy rates.
CMHC released its annual rental market report showing that vacancy rates were variable across the region with West Vancouver posting the lowest at 0.1 per cent, and Surrey posting the highest at 4.7 per cent.
The city of Vancouver showed an overall vacancy rate of 0.7 per cent, up slightly from the 0.6-per-cent vacancy recorded in 2004, but rates varied considerably from region to region.
The East Hastings area, which includes the Downtown Eastside, had the highest vacancy rate in Vancouver at 2.1 per cent, the West End/Stanley Park and Kerrisdale had the lowest at 0.2 per cent.
Some specific apartment types, such as two-bedroom units in the West End and three bedroom units on English Bay, showing zero vacancy.
Across downtown, including the West End, the CMHC report showed only 63 vacancies among 20,609 units. Across all Vancouver, it was 394 vacancies out of 56,338 units.
Average rents also showed some variability although on average, Muir said rents did rise between 1.5 per cent and 2.7 per cent.
Across Greater Vancouver, the average rent for a two-bedroom unit was $1,004 in October, compared with $984 in the CMHC’s survey a year ago. The highest rents, however, were in West Vancouver where a two-bedroom suite let for $1,548 a month. The lowest rents were found in Surrey where a two-bedroom unit let for an average $777.
The average one-bedroom suite rented for $788 a month in October, up from $774 a year ago. The highest rents were in UBC’s University Endowment Lands where the average rent was $1,030. The lowest were in Surrey where a one-bedroom unit, on average, let for $617.
Scott Ullrich, president of Gateway Property Management Corp., which manages some 10,000 units in Greater Vancouver, noted that while the rent increases that landlords are charging look like they are keeping up with inflation, their utility costs, a big component of their expense side, are rising faster than inflation.
“Business is good,” Ullrich added. “Average rents are moving up … [but] the one to three-per-cent increases in rents are below what is allowed under the [provincial] Residential Tenancy Act, which tells you it is an efficient market.”
Ullrich, however, noted that the CMHC survey does not measure the “hidden” portion of the rental market consisting of investor-bought condominium apartments, which are a significant part of certain markets.
Ullrich estimated that if investor-owned units in downtown condo towers were factored into the equation, downtown’s vacancy rate could be as high as 1.5 per cent.
However, the further you move away from downtown, especially in suburbs such as Burnaby and Surrey, more condos are owner-occupied and “the hidden vacancy is a little bit less.”
He added that strong net migration to B.C. is keeping demand for rental accommodation strong, and the region’s labour shortage is helping to push up wages and increase people’s disposable income. That allows them to spend more on higher-quality accommodation.
“As such, we’re seeing landlords spend money on improving their buildings,” Ullrich said.
In its report, CMHC said Greater Vancouver’s purpose-built rental stock has remained stagnant at about 107,000 units for about 10 years. Individual investors putting money into condos have become the key suppliers of new rental units.
However, Ullrich said the improving rental market is making it more viable to build new apartments with about 1,200 new units built or being built downtown.