Rental housing affordability worsened in B.C.’s most densely populated regions, Metro Vancouver and Greater Victoria, according to a new report from Canada Mortgage and Housing Corporation.
While both Vancouver Census Metropolitan Area and Victoria Census Metropolitan Area continued to add more rental supply in 2023, population growth caused by record immigration stoked demand for more rental housing in both regions.
Two reasons are behind this development. First, immigrants tend to be renters, according to the report. Second, new immigrants to B.C. overwhelmingly choose to settle in Metro Vancouver, followed by Greater Victoria.
The report also points out that both regions are home to several post-secondary institutions, with students overwhelmingly renting.
In Metro Vancouver, the purpose-built rental supply grew by 2.7 per cent, in Victoria by 5 per cent, according to report. But these increases in supply were, as the report puts it in the case of the Metro Vancouver “quickly absorbed.”
A similar development, albeit less pronounced, unfolded in Greater Victoria. Not surprisingly, the overall vacancy rate for both regions remained unchanged at respectively low levels — 0.9 per cent for Metro Vancouver, 1.6 per cent for Greater Victoria.
But the tight rental markets in both regions do not treat renters equally. Renters with lower incomes felt the competition more painfully in their pocket books.
Consider CMHC’s analysis for Greater Victoria, whose rental market offers better prospects than Vancouver’s.
“Increasing rents put pressure on affordability, especially for lower-income earners,” it reads, adding that minimum-wage workers renting at Victoria’s average rate would have to spend over 40 per cent of their monthly income to rent. By way of context, the average rent for two-bedroom apartment in Victoria is $1,839 — up almost eight per cent from 2022.
“Those seeking new accommodations are likely to face rents in the market that are higher than average, constraining renter budgets even more,” it reads.
The situation in Metro Vancouver is even worse, according the CHMC analysis.
“In 2023, a minimum-wage worker renting at the average bachelor unit rent would see over 50% of their monthly income go towards rent,” it reads. “Those entering the market or moving may see more challenge as asking rents are typically above the current average.”
By way of context, the average rent for a two-bedroom apartment in Metro Vancouver was $2,181 in 2023. Overall, rents across all bedroom types increased by 9.7 per cent in 2023, up from 6.3 per cent in 2022.
CMHC’s analysis of Metro Vancouver also points to another growing phenomenon.
“Lower-income renters are also more likely to seek more affordable but smaller units or shared living arrangements that will fit their budget but that may not meet their housing needs,” it reads.
In other words, people at the lower-income scale are increasingly paying more for lower-quality housing.
But the report also includes some positives. Rental supply in both Metro Vancouver and Greater Victoria continue to grow with Victoria continuing to exceed its historical pace.
“Purpose-built universe continues to expand quickly to meet rental market demands,” it reads.
The report specifically points to Greater Victoria’s suburban areas in singling out Langford, one of the fastest growing municipalities in Canada.
“New developments in Langford, especially, are driving the rental universe growth in the region, as the city is relatively affordable and development policy is attractive,” it reads.
CHMC’s rental report did not review B.C.’s two other CMAs — Abbotsford and Kelowna — nor did it consider rental rates in B.C.’s rural areas. Overall, it reviewed the rental market in 18 CMAs from coast-to-coast and the national picture.
The national picture reflects many trends also apparent in B.C.
The overall national vacancy rate is 1.5 per cent in reaching a new historic low, while the average two-bedroom rent is $1,359 for Canada as a whole.
Supply was unable to keep with demand fuelled by immigration, employment gains and declining home-ownership rates, it reads.
“Affordability decreased, as rent growth exceeded average wage growth by a wide margin,” it reads. “Lower-income renters faced below-average vacancy rates for the least expensive units in most cities.”