Renters gaining upper hand in Victoria

Apartment vacancies up over last year

Greater Victoria is gradually becoming a renters’ market, according to new data from Canada Mortgage and Housing Corporation.

Apartment vacancies in the region rose to 3.5 per cent in April, up from 2.7 per cent during the same month a year ago, said the federal agency’s rental market survey.

Though it’s almost on par with the province’s vacancy rate of 3.4 per cent, Victoria has “a cost premium on home ownership that represents a strong motivation to rent,” states the report released on Tuesday.

Factors that could explain the jump in Victoria’s vacancies include the higher unemployment rate for young people and a larger supply of apartment condominiums. There were 331 apartment condominium buildings in April, compared with 291 a year ago.

A gradual increase in apartment vacancies is in line with last year’s report, but according to the CEO of Rental Owners and Managers Society of B.C., Al Kemp, Victoria’s vacancy rate is likely much higher than 3.5 per cent. He estimates it’s between five and six per cent.

Local landlords struggle to deal with market inflation and rent control, as well as the high vacancy rate, he said.

“That's the squeeze on our industry,” he said.

“From an annual operating perspective, it’s not a good time to be a landlord,” Kemp said. “Heating oil has gone up 20 per cent in the last year,” he said, adding that it’s just one example of the rising costs that landlords face.

The survey doesn’t include all rental properties and only encompasses rentals with at least three units. It means houses and duplexes are missed, Kemp said, adding that building managers might not want to disclose the true number of vacancies in their properties, skewing the survey’s results.

Kemp said a healthy vacancy rate is about three per cent, but Victoria's landlords have been “spoiled” for the better part of the last decade with vacancy rates close to zero.

He said it’s now more common for landlords to maintain their rent prices or even drop them in an effort to deal with longterm vacancies.

“I’ll talk to knowledge- able landlords with two or three properties, and they’ll talk about having a vacancy for two months,” Kemp said, adding that it’s a trend he’s seen for at least the last 12 months.

He said it’s also more common for people to double-up in living quarters and it’s possible there are fewer university students moving to the city, adding to an increase in vacancies.

“That’s not a big piece but it’s a piece,” he said.

Renters looking for three-bedroom apartments or bachelor suites will face substantially less choice, according to the report. These unit types have vacancy rates of 1.4 per cent and 1.7 per cent, respectively, representing a slight decline from last year.

“The larger units might be in higher demand because people are choosing to stay in rentals,” said Carol Frketich, the B.C. regional economist for CMHC. She added that Victoria doesn’t have “the tightest market in the province, or the one with the most vacancies.”

Kelowna posted the highest vacancy rate for a large urban centre, at 5.2 per cent, down from 6.6 per cent last year. Vancouver’s tight rental market maintained the lowest vacancy rate, at 2.6 per cent.

“It’s stable at the provincial level,” Frketich said, adding that the cost of renting in B.C. is on the higher end of the spectrum compared with the rest of Canada. “There was an increase in average rent by 2.3 per cent compared to April last year.”

Victoria’s average rent rose by 1.6 per cent since April 2011. Renters can expect to pay an average of $874 per month, compared with $851 last year.