More vacancies but higher average rent prices forecast for Metro Vancouver: CMHC
Lower overall demand to temper impact of new pricier units entering the market, housing authority says
Metro Vancouver's rental market will see growing vacancies but higher average prices over the next couple of years, according to the latest forecast from the Canada Mortgage and Housing Corporation (CMHC).
CMHC's latest forecast summary for Vancouver's rental market projects an annual vacancy rate of 2.9 per cent in 2027, up from 1.6 per cent in 2024 and a projected rate of 2.1 per cent this year.
However, that doesn't mean rental prices are necessarily going to drop. The corporation projects the monthly rent for an average two-bedroom will rise to $2,758 in 2027, up from $2,314 last year and a projected $2,461 this year.
"A record number of units are under construction now, especially in purpose-built rental construction as efforts to increase rental supply," says CMHC economist Shiva Moshtari Doust. "Most of these units will enter the market in the next few years."
But, the CMHC report says, many of those new units will likely come onto market at high rents.
"As more new, higher-priced units come onto market, average rents will continue rising," the report reads.
"However, we expect asking rents to be negatively pressured as rental demand declines. This will help affordability and lead to higher turnover as the gap between rents of occupied units and vacant units decreases."
Moshtari Doust says demand for rentals is expected to be affected by the federal government's recent reduction of immigration levels, which aims to stabilize population growth and relieve pressure on the housing market.
"Recent years have seen large inflows of non-permanent residents. We expect to see this net inflow slow over the next few years. So as a result, we expect to see lower demand," she said.
The report notes that changes to immigration could impact rental prices as newcomers are more likely to rent than own their home.
Matisse Yiu with the online rental platform liv.rent says she is already seeing more competitive pricing.
"We're seeing a lot of property managers or landlords in general doing three months' free rent or renters being able to negotiate a lower asking rent price," Yiu said.
"And that's something that I think renters are doing a lot more."
Tariff threats loom
Tom Davidoff, an associate professor at the Sauder School of Business at the University of British Columbia, says there are concerns about a recession because of the threat of U.S. tariffs.
"A very large fraction of Canada and B.C.'s economic activity involves exports to the U.S. If that gets effectively shut down by a 25 per cent tariff, you see people losing jobs and losing income," he said.
"When people lose jobs and income, obviously they're not able to pay as much for rent and they're less able to purchase a property."
Davidoff says construction costs for new developments are already high and looming economic challenges could make things worse.
"We're going to see a slowdown in construction," he said. "That won't have any impact on affordability in the short run, but a few years from now we'll have a shortage of units."
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With files from Michelle Morton and Darren Major