A building boom that has seen cranes dotting the skyline of Greater Victoria has brought the overall rental vacancy rate up to its highest level since 2013.
A 5.7 per cent increase in the number of purpose-built rental units in the region helped to raise the vacancy rate to 2.6 per cent, said Canada Mortgage and Housing Corporation’s rental-market report released this week.
The rate was 1.6 per cent at the same time last year.
Most of the new units were added on the West Shore, with more than half the increase in Langford and Sooke.
Victoria accounted for just under one-third of the new units.
The cost of rent rose by an average of 3.6 per cent, the report said.
It noted that the average rent for a one-bedroom unit in the region jumped to $1,528 in 2024 from $1,427 at the same time last year. The average rent for a two-bedroom unit rose to $1,993 from $1,839 and a three-bedroom unit increased to $2,389 from $2,089.
Average rents are based on what people are actually paying, not what vacant units are renting for.
CMHC market analyst Shiva Moshtari Doust noted that while the vacancy rate has increased, demand for rentals remains strong in Victoria, which has had some effect on the rental-rate increase. Doust said there are segments of the market that are softening due to the cap on international students and lower interest rates that might have drawn some renters into the home-ownership market.
However, the strong pace of construction is just keeping ahead of demand, she said.
She said the region’s economic strength and strong employment numbers are a reflection of a large government presence, as well as a large health-care sector, which translates into high demand for housing.
Doust said demand is particularly strong at the lower end of the market and in Victoria, where land is scarce.
Rental rates are likely to continue to rise, she said, due to the cost of construction materials and labour driving up the rates for new purpose-built rental units.
Doust said it’s likely the region will see more of the same over the next two years as thousands of units currently under development hit the market. That will mean a slightly higher vacancy rate, but likely higher rental rates for the new units.
“This year what we saw was that trend or pace of [rental rate] increase is slowing down a little and that’s really due to the market and supply and demand forces,” she said.
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