The results are not surprising with low vacancy rates continuing to persist in a large swath of the BC as the demand for rental housing, secure purpose-built rental housing in particular, continues to outpace the supply. The demand for all rental, and secure purpose-built rental in particular, can be attributed to high levels of net international migration, improving employment conditions for younger households and, boomers selling their homes and opting to rent. In addition, current renters looking to purchase their first property, typically an apartment condominium, face two growing barriers: rising carrying cost and rising required down payments. These prospective first time home buyers are consequently remaining in the rental market for longer. They can take some comfort in the fact that renting remains significantly less expensive in secure purpose-built rental and meaningfully less expensive in rental condominiums too, when compared to the carrying costs of median priced condominiums which have increased quickly and substantially despite record low mortgage rates.
As rental demand grows, more rental supply is needed, and particularly more secure purpose-built rental supply. While we are seeing new rental construction, with new secure purpose-built rental starting to see some decent traction, this new construction is distorting the average rent increase results. While all new secure purpose-built rental supply is critical to address the scale of need, due to high land, permitting and construction costs, most of the new units completed are “condo quality” in terms of finish and amenities, resulting in monthly rents at the high end of the spectrum. The only way we can hope to see more new secure purpose-built rental supply targeted to the “missing middle” is if the federal government seriously looks at its tax policy for rental buildings, while the provinces and cities take a hard look at their development charges and delays in planning approvals. Those are the factors holding back much-needed purpose-built rental supply.