Despite having the nation’s highest rents, Vancouver saw vacancy rates drop to pre-pandemic levels last year as increased migration and the return of out-of-region students boosted rental demand.
According to a recent report by Canada Mortgage and Housing Corporation (CMHC), Metro Vancouver’s vacancy rate for purpose-built rental apartments fell from 2.6 per cent in 2020 to 1.2 per cent in 2021.
Students and immigrants swallowed up rental supply in downtown Vancouver, where vacancy rates dropped to 1.6 per cent last year after a pandemic-related exodus pushed it four per cent in 2020.
“From both international and domestic origins, migration to the Vancouver area increased strongly in 2021 as borders reopened and B.C.’s economy expanded,” the report stated. “In particular, rental demand from international migrants is expected to remain strong over the coming years, given the federal government’s higher immigration targets.”
The national vacancy rate remained steady at 3.1 per cent in 2021, down slightly from 3.2 per cent in 2020.
Although vacancy rates declined in 21 of the 37 markets surveyed in the report, they were stable in Montreal, which accounts for approximately 30 per cent of the nation’s total rental market, followed by Toronto (15 per cent) and Vancouver (five per cent).
Toronto’s rental market bucked the national trend, as vacancy rose from 3.4 per cent in 2020 to 4.6 per cent in 2021, reflecting delayed pandemic recovery and limited rental demand in Canada’s largest urban centre.
In Vancouver, rental demand exceeded available supply. According to CMHC, approximately 1,600 purpose-built rental apartments were added to Metro Vancouver in 2021, representing a 1.4 per cent increase in total supply.
“Units in new structures had higher rents and vacancy rates than units of all ages, though the differences were less pronounced than in 2020 as many new units found tenants,” reads the report. “Research shows that new rental supply aids affordability at the regional level as new, higher-priced units free up lower-priced units and ease demand for existing housing.”
While vacancy rates dropped last year, affordability remains an issue. Average rents for apartment units across Metro Vancouver increased two per cent last year, similar to the previous year, with suburban apartments generally seeing higher rent increases than those in central areas.
CMHC estimates less than a quarter of market purpose-built rental homes are affordable to households earning under $48,000 annually, and only one in 1,000 units are affordable to renter households in the bottom 20 per cent bracket of incomes.
“While some challenges remain, employment for younger people and workers in the accommodation and food services industries recovered strongly,” said the report. “Both of these groups disproportionally rent. Renewed earnings allowed new rental households to form, particularly in central areas with high rents that had been vacated in 2020.”
Adding to the supply on available units in Metro Vancouver, rental condominiums increased by 2,550 units or 3.3 per cent in 2021.
“These results contrasted the strong conversions of existing condominiums to long-term rental in 2019 and 2020, when property owners adapted to new housing policies designed to encourage long-term rentals,” said the report.
