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Rental market tight and rents are rising
by Carla Wilson

As printed in the "Times Colonist" - Friday, December 14, 2007

October vacancy rate stays at 0.5 per cent for three straight years

If you've got a rental apartment, keep it.

Greater Victoria's rental market remains tight and rents are rising.

The region's vacancy rate for October remained at 0.5 per cent, the same rate as in October 2006 and October 2005, Canada Mortgage and Housing Corporation said yesterday.

Jim Bennett, Victoria Real Estate Board government relations co-ordinator, who also sits on local housing committees, said, "0.5 per cent is not good news."

It makes the challenge of housing the homeless in this region even more difficult, he said.

Escalating land prices and construction costs lead builders to construct homes to sell, whether they are condos, townhouses or single-family houses. In the past two decades, only a handful of buildings designed for rental accommodation have been built, Bennett said.

When municipalities add on development cost charges and insist on underground parking for multi-family projects, those costly requirements make rental projects more expensive, he said.

While community organizations and governments try to find a way to ease the rental market crunch, house prices in Greater Victoria continue rising. In November, the average price of a single-family house in Greater Victoria hit a record at $596,586.

And as house prices remain strong, the national apartment vacancy rate remains low.

Among 34 major cities surveyed by CMHC the vacancy rate was 2.6 per cent, the same as in October 2006, CMHC said.

Five communities had vacancy rates of less than one per cent, including Victoria (0.5 per cent) , Kelowna (0), Vancouver (0.7 per cent), Saskatoon (0.6 per cent), and Greater Sudbury (0.6 per cent).

B.C.'s vacancy rate was one per cent, a slight change from October 2006 when it was 1.2 per cent.

Provincially, average monthly rental rates for a two-bedroom unit went up to $922 in October from $885 the previous year.

"Strong employment growth, solid income gains, and high immigration levels continued to support strong demand for both ownership and rental housing," said Bob Dugan, CMHC chief economist.

"The rising gap between the cost of home ownership and renting also kept demand strong for rental accommodation."

CMHC's Greater Victoria survey covers rental units in buildings built for that purpose. It also includes condominium units in buildings where the majority of units are rented under one property manager, said Peggy Prill, CMHC analyst in Victoria. However, many rental condo units aren't counted because they are individually rented. Not included in the survey are single-family houses and duplexes, basement suites, and subsidized housing.

In Greater Victoria, CMHC said there are 23,635 rental apartment units and 714 townhouse rentals. Prill estimates that if rental units not counted were included, the total figure would be close to 50,000.

The average rent of a one-bedroom apartment (the most common) in Greater Victoria was $716 in October and a two-bedroom was $907.

Those figures are both increases from October 2006, when an average one-bedroom was $681 and a two-bedroom was $874. Rents vary depending on the area, Prill said.

One survey sample found that rents rose eight per cent year-over-year in Oak Bay, 5.2 per cent in the city of Victoria, and 0.7 per cent in Sidney, she said. "Which is surprising considering they have a low vacancy rate."

In Sidney, the vacancy rate was zero, while in the West Shore it was 1.5 per cent, she said.

For those wanting a unit with three or more bedrooms, there was little available last month. In the entire region, only five such units were vacant, Prill said.