Strong employment and increasing home prices are driving rental demand across Metro Vancouver, and the region’s notoriously low apartment vacancy rate diminished even further over the past year.
The vacancy rate across the Vancouver Census Metropolitan Area (CMA) slipped from 0.8% in October 2015 to 0.7% a year later, according to a Canada Mortgage and Housing Corporation report released November 28.
“Strong demand for rental accommodation in [the Vancouver CMA] outpaced additions to supply, pushing rents higher and vacancies lower for purpose-build and condo rental apartments,” said CMHC principal of market analysis Robyn Adamache.
The report said a strong job market is driving rental demand, particularly for younger demographics that tend to start off as renters.
“The Vancouver CMA continues to lead employment growth nationally, at a pace of 5.8% year-over-year as of September 2016 [according to Statistics Canada data],” the CMHC said in a report. “This equates to more than 70,000 additional jobs created, compared with the same period last year.”
Solid employment in the region is also driving demand by increasing migration to the province, according to the report.
“The Vancouver CMA added an estimated 15,773 new households between 2015 and 2016,” the CMHC said. “This population-based demand is one of the main factors contributing to low vacancy rates.”
The decrease wasn’t coming from within the City of Vancouver itself, however, as vacancy actually increased slightly in Vancouver alone. In the Downtown/West End area, the rate increased from 0.5% to 0.6%. In the rest of the city, the rate grew from 0.6% to 0.8%.
The region’s tightening vacancy rate was driven by declining availability in the suburbs, and the most drastic drop was found in Surrey. Last October, that city had an apartment vacancy rate of 1.9%; this year, the rate plunged to 0.4%. Vacancy also fell in Burnaby (October 2015: 1.2%, October 2016: 0.8%) and New Westminster (October 2015: 0.9%, October 2016: 0.4%).
The average rent in the Vancouver CMA increased from $1,144 in October last year to $1,223 this year – an increase of 6.4%. Rent increased across all regions, with Vancouver’s West End/Downtown area seeing a jump from $1,350 to $1,461. In the rest of Vancouver, average rent increased from $1,233 to $1,324. Rent also increased in Burnaby (October 2015: $1,031, October 2016: $1,105) and New Westminster (October 2015: $933, October 2016: $993).