The multifamily market in Vancouver Metro Area experienced an extremely low vacancy rate of 0.9% in 2022, with some neighbourhoods nearing full occupancy. The record level of immigration underpinning rental demand, combined with rising borrowing costs and resident inflow, led to apartment demand surpassing inventory growth. This resulted in an 8.3% increase in the average effective rent compared to 2021 levels, the highest rate of increase since 1991. Despite the high debt burden of households weighing on the metro’s economy, Vancouver is on track to welcome a record number of immigrants in 2023, supporting the overall rental demand.
Graph 1: Completions and Vacancy Rate (2018-2023)
Key Trends and Forecasts for 2023
- Employment: The high debt burden of households will cause local employment to slow, but increased immigration will likely prevent the job market from contracting. Approximately 1,500 jobs will be created in 2023.
- Construction: With a significant increase in rental apartment construction starts during the past two years, 8,300 units are expected to be completed in 2023. This is a 45% increase in new openings across the Greater Vancouver Area (GVA) compared to the previous year.
- Vacancy: The strong demand from immigration will balance out the increase in supply, causing the vacancy rate to stabilize below 1.0%. The city’s 3-3-3-1 initiative and the Broadway Plan may provide relief to the tight rental market in the coming years.
- Rent: The ultra-low vacancy rate in Vancouver indicates an extremely competitive apartment market, which will keep rents on an upward trajectory. The average effective rent is expected to reach approximately $1,785 per month, the highest monthly cost in Canada.
Average Effective Rent (2018-2023)
|Year||Average Effective Rent|
In 2022, 5,691 units were completed, a decrease of approximately 1,000 units due to rising building and financing costs. However, the Marpole, West Vancouver, and New Westminster submarkets experienced a significant increase in deliveries. The vacancy rate decreased by 30 basis points year-over-year, while the average effective rent increased by 8.3%.
In line with the national trend, high financing costs led to a contraction in investment activity across all deal sizes in 2022. However, investors expecting interest rates to stabilize resulted in sales activity rebounding in the fourth quarter. Vancouver’s average sale price rose by 8% to $408,000 per unit in 2022, surpassing Toronto as the second-priciest market. With the approval of the Broadway Plan, large-scale development is expected in the Broadway Corridor, including public transit and housing projects, office and retail additions, and a projected population growth outpacing the entire GVA.
The Vancouver Metro Area multifamily market will continue to face challenges from high demand and limited supply in 2023. The city’s 3-3-3-1 initiative, the Broadway Plan, and a record number of immigrants are expected to provide some relief to the tight rental market. Investors and developers should monitor these trends and opportunities closely to capitalize on the growing demand for rental housing in the region.