Vancouver renters face increasingly tough market, CMHC report finds

Homes are pictured in Vancouver, Tuesday, Apr. 16, 2019. THE CANADIAN PRESS/Jonathan Hayward

Vancouver renters continued to pay the highest prices in Canada as vacancy rates in the area dipped below one per cent last year, according to new federal data.

Canada Mortgage and Housing Corporation released its annual rental market report Thursday, noting that nation-wide vacancy rates plunged to their lowest since 2001 as demand surged due to higher mortgage rates, the return of international students, and an increase in net migration – particularly in major metropolitan centres.

"These results reinforce the urgent need to accelerate housing supply and address supply gaps to improve housing affordability for Canadians," the report said.

Despite seeing the largest number of new, purpose-built units since 1990, supply remained extremely tight in Vancouver where the vacancy rate was 0.9 per cent, down from 1.2 per cent in 2021.

The average price for a two-bedroom rental in Vancouver was up 6.3 per cent – to $2,002 for a purpose-built unit and $2,504 for a condo. The area also has the highest rate of condos for rent in Canada, at 42.5 per cent.

"Important imbalances exist in the Vancouver rental market. Our data show that lower-income households face significant challenges finding units that they can afford," the report said.

Only about one in three market units are affordable to households with an annual income of less than $55,000, only one in 200 are affordable to households with the lowest 20 per cent of incomes.

The report also noted a stark difference between the asking price for vacant and occupied units

"The average asking rent for vacant units was 43 per cent higher than the overall average rent for occupied units in the Vancouver (census metropolitan area)," the report said.

"This was significantly higher than the 10 per gap observed in 2021, as the average asking rent for vacant units soared in 2022. While some new units with high rents are currently vacant, an influx of such units wasn’t the main contributor to higher asking rents."

The report notes that the province limits the allowable rent increase for tenants who remain in their suites so that, for example, the average annual rent increase for a two-bedroom went up by 3.9 per cent for renters who stayed put. In contrast, a unit that turned over to new tenants saw a jump of 23.9 per cent.

"Fewer units coming to market creates a more challenging environment for new renters. The market can’t accommodate as many moves as before, leading to higher rents for those units that do come to market," the report said.

"New leases are formed under current market conditions. Due to rent control, existing leases reflect market conditions in the past. This results in a gap between the overall average rent paid and current market rents."

The full report is available online.