Unaffordability, turnover price hikes dampen Greater Victoria’s record rentals year: CMHC

Unaffordability, turnover price hikes dampen Greater Victoria’s record rentals year: CMHC

The increase in rental stock in Greater Victoria over the past year has helped push up the region’s vacancy rate slightly, but barriers remain for low-income renters, those who have had to move and people who need larger homes.

The rental market tightened nationwide due to rising demand in 2022, with the vacancy rate in Canada not having seen such low levels in more than two decades, according to the Canada Mortgage and Housing Corporation’s 2023 Rental Market Report.

Greater Victoria continued to have one of Canada’s lowest rental vacancy rates as it edged up to 1.5 percent in 2022. In contrast to 2021, the city of Victoria had a lower vacancy rate than its surrounding communities as CMHC said demand was returning to the urban core with the expansion of hybrid work.

The West Coast vacancy rate (1.5 percent) rose just over 1 percent last year, the South Island’s largest increase after most of the region’s purpose-built rental housing took place in those communities. However, these newly built units were, on average, the most expensive in all of Greater Victoria, which tamed demand on the west coast.

With the average rent for functional housing rising 7.7 percent, the report’s fastest growth since 1991, 2022 was historically expensive for some new tenants. The CHMC said a new tenant moving into a two-bedroom apartment will be charged 33 per cent more per month than someone in an occupied unit in the same building.

The turnover rate in buildings built after 2005, which the CHMC says are typically more expensive, was twice that of older homes. According to the report, this contributed to the overall rise in rents, making residents less likely to move unless people went to cheaper communities on the island.

The region added 1,411 rental units last year, more than double the net increase in 2021.

“Record-high supply growth helped ease rental market tightness, while rising demand accelerated rent increases,” Pershing Sun, a local senior analyst at CHMC, said in the report.

The local market continued to be a problem for lower income and larger households, with just one per cent of Greater Victoria units affordable for renters in the lowest 20 per cent of income.

Space considered affordable for households earning less than $49,000 had a vacancy rate of just 0.4 percent in 2022 and accounted for a third of earmarked rents. The vacancy rate was 0.8 percent for three-bedroom rentals that would be affordable for a $75,000 family.

“The supply of affordable and suitable rental options still does not match demand,” the report said.

Another factor spurring demand was that most of the 6,200 jobs the region created from January to October last year were part-time, with workers disproportionately renting.

In Greater Victoria, local rental supply for townhouses also saw a 12% decline, causing the vacancy rate of these three-bedroom units to rise from 6.2% to 3.5%.

READ: Greater Victoria home prices rise in 2022 even as Canada falls

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