Victoria in 'dire need of rental housing' as vacancy rate drops: CMHC

A view of downtown Victoria from Mt. Tolmie. (CTV News)

Greater Victoria's rental housing market tightened in 2021, returning to pre-pandemic vacancy rates below those of Greater Vancouver, according to the latest rental market report from the Canada Mortgage and Housing Corporation.

Record migration to British Columbia, coupled with a recovering local job market, sent demand for new units and bachelor suites especially high, even as prices continued to climb, according to CMHC analysts.

Households earning less than $42,000 annually cannot affordably rent a bachelor suite, as rental prices remain at least $350 per month higher than their affordability rate, according to the report.

Similarly, those earning $64,000 or less would have to spend at least $400 per month more for a two-bedroom unit than what is considered affordable. The vacancy rate for affordable two-bedroom units was approximately 0.2 per cent last year.

"The majority of rental households, especially low-income households, remain in dire need of affordable and suitable rental housing," the report found.

VACANCY RATES

The regional vacancy rate declined from 2.2 per cent in 2020 to one per cent in 2021, while the vacancy rate in areas like the West Shore communities fell to 0.4 per cent last year from two per cent in 2020. By comparison, Greater Vancouver's vacancy rate was 1.2 per cent last year, according to the report.

The supply of new rentals in Greater Victoria dwindled in 2021 compared to 2020, especially in the city's urban core.

Across the region, the vacancy rate for two-bedroom units was 0.8 per cent in 2021, and the vacancy rate for new rentals (completed after 2018) was 0.5 per cent, according to the federal housing corporation.

The CMHC says the average two-bedroom rental cost last year was $1,571, an increase of 3.1 per cent. However, prices for vacant units were $300 to $400 more expensive than occupied units, discouraging long-term renters from moving, according to the CMHC.

MIGRATION AND JOB MARKET

Between July 2020 and June 2021, more Canadians moved to B.C. than anywhere else in the country, according to the CMHC.

There was a net inflow of over 34,000 people last year, a record high since 1994. Many post-secondary students also returned to campuses, creating more demand for rental housing, the corporation added.

Meanwhile, the capital region added 5,600 jobs between January and November 2021, with 80 per cent of those being full-time employment.

The unemployment rate for 15 to 24 year old renters returned to pre-pandemic levels, while the hard-hit hospitality sector recovered about half of the jobs lost in 2020, according to the report.

RENTAL SUPPLY SLOWS

Victoria's supply of purpose-built rentals grew by 660 units last year, which was roughly half of what was added in 2020, according to the CMHC.

That new rental supply was found only in a few areas, the CMHC noted, particularly in Saanich and the West Shore. Among new units completed since 2018, more than half were in the West Shore.

"With demand resuming and supply growth slowing, Victoria could see additional tightening in the rental market," the CMHC report warned. "The majority of rental households, especially low-income households, remain in dire need of affordable and suitable rental housing."