Rent hits $1,000 range in city’s better areas

Wednesday, November 16th, 2005

Fiona Anderson

Renters in the Lower Mainland are paying more for well-kept apartments in top areas of Vancouver, and those rents are likely to keep going up, a local realtor says.

Higher insurance, taxes and energy costs, have led to increases of more than 40 per cent in locations like Kitsilano, South Granville, West Vancouver, Kerrisdale and west of Denman Street in downtown Vancouver, David Goodman of Macdonald Commercial R.E.S. Ltd., said in an interview.

“I’ve observed over the past three weeks a number of examples where in the [best] locations, [for] suites in buildings that are in good condition, the rents have gone from $750 to $1,000 to $1,100 for a one-bedroom,” Goodman said.

In this economy, rents should go up, said Tsur Somerville, director of the UBC Centre for Urban Economics and Real Estate.

“If you have an increase in population, and particularly if you have people moving in who are working here but not necessarily going to be here long-term, one would expect demand for rental properties to rise,” Somerville said in an interview. “Holding the supply constant, demand’s going up, rents should rise.”

In 2004, the average vacancy rate in Greater Vancouver was 1.3 per cent, Cameron Muir, a senior market analyst with CMHC said in an interview. That rate is expected to be about 1.5 per cent in 2005. But some areas, like Kitsilano and the West End, have vacancies of less than one per cent and have been like that for many years, Muir said.

At the same time, rents have remained low, just keeping pace with the rate of inflation, Muir said.

The increases aren’t across the whole market, Goodman is quick to point out, but for good apartments in good areas, there has been a noticeable jump in rents recently, he said.

He attributes the increases to a lack of supply. People are moving into Vancouver and having “sticker shock” when they see the price of condominiums, Goodman said. And with interest rates on the rise, fewer people are going to be leaving the tenancy market to buy a condo, he said.

Current renters don’t have to worry about hikes in what they are paying as provincial law limits how much landlords can raise the rent. The current cap for 2006 is about four per cent, Goodman said. But for new tenants, the landlord can charge whatever the market will bear.

Increasing interest rates, and other costs, also mean landlords can no longer afford to keep rates at current low levels of $750 or $800, Goodman said.

“Taxes, insurance [and] hydro have all just soared, yet rents have only increased about 10 per cent,” Goodman said. “Now that’s in a climate where we’ve had 40- to 60-per-cent increases in everything else.

“So owners sense that maybe now is the time to raise these rents,” Goodman said.

Lynda Pasacreta, a spokeswomen for the B.C. Apartment Owners and Managers Association, does not believe rents are going to increase dramatically.

Most landlords are more interested in keeping tenants long-term than increasing rents because it costs a lot of money to look for a new tenant, Pasacreta said.

© The Vancouver Sun 2005

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