For renter households, the latest data from Canada Mortgage and Housing Corp.’s annual Rental Market Survey is unlikely to be a surprise. While not universal across the province, 2018 marked another year of rock-bottom vacancy rates and soaring monthly rent.
Provincially, the average vacancy rate for apartment units was little changed at 1.4%, up from 1.3% in 2017 – the fourth year in a row that the vacancy rate was below 1.5%. The long-term average vacancy rate since 1990 was 2.4%. A sustained period of low vacancy rates has propelled rents higher. Same-sample apartment rent growth jumped to 6.3% over the past year, well outpacing both consumer price inflation and wage growth. This followed a 5.8% increase in 2017.
The vacancy rate in the Vancouver census metropolitan area (CMA) edged up to 1% from 0.9% in 2017. An increase in supply contributed to an increase in Kelowna to 1.9% from 0.2%, Victoria rose to 1.2% from 0.7% and Abbotsford-Mission rose to 1% from 0.2%. The lingering effects of the commodity downturn had Fort St. John at 16.7% and Dawson Creek at 9%.
Average apartment rent levels were highest in the Vancouver CMA, at $1,385, with Victoria at $1,170. Average apartment rents vary across the province but are generally in the $800-to-$900 range in smaller urban markets. Tight markets posted strong rent growth, with Vancouver CMA rents up 6.2%, while Kelowna, Victoria and Abbotsford-Mission rents rose 8.1%, 7.5% and 7.9%, respectively. While hikes for renters who did not move during the year were limited to the government’s allowable rent increase of 4%, turnover rents rose significantly.
A tight labour market and wage gains, and expected persistence of stronger population growth, will contribute to rising rental demand, while federal mortgage “stress tests,” paired with higher interest rates, will funnel demand to rental accommodations. Recent changes to limit allowable rent increases to inflation may create a disincentive for private developers to build purpose-built rental properties.
Growth in B.C. average weekly earnings took a breather in September. Average earnings, including overtime, edged down 0.2% to $978.10. However, year-over-year growth remained among the strongest in the country during the month, alongside Prince Edward Island, at 2.7%. Average wage earnings are up by 1.8% since May. •
Bryan Yu is deputy chief economist at Central 1 Credit Union.
