Expect rent to keep rising in Kamloops, Okanagan as home prices fall
While housing prices have dropped dramatically since their peak last spring, the cost to rent a home in Kamloops and the Okanagan keeps going up.
Rent for a one-bedroom apartment in Kelowna, for example, squeaked above the $2,000 per month mark for the first time in October.
Don’t expect the rental market to get any better any time soon.
“The reality is, until we start getting costs under control they will be reflected in rents,” Hunter Boucher, director of operations for LandlordBC, told iNFOnews.ca, Nov. 29. “It comes down to a very complex ecosystem that has seen steady and consistent and significant increases in operating costs and financing costs that really has seen no relief.”
Landlords face the same inflationary costs as others in terms of maintenance, repairs, utilities and insurance.
Existing tenants are protected by a provincial cap on annual rent increases of 2%.
Although Boucher has no hard data, there appears to be a significant drop-off in turnover of existing apartments, given the current market conditions. That means new construction is driving rent increases as the owners set rental rates to account for the ongoing increases in cost.
“People are being very wary about how they plan for future increases and certainly are going to be prudent in making sure the rents they're setting are going to be sustainable,” Boucher said.
Some developers are hesitant about building rentals despite the high demand for rental housing.
“The 2% cap on rent increases is a very significant impact on the rental housing industry,” Boucher said. “It’s not just the impact on the actual rents but on the perceived confidence within the market itself for people who are looking at investing in creating rental housing. The reality is, from a financial standpoint, it needs to make sense.”
Like anything else, the higher the demand, the higher the price that landlords can charge.
“Rents are going up because rental demand is increasing rapidly, while supply isn’t,” Robert Houge, assistant chief economist with RBC Economics, told iNFOnews.ca in an email.
“Deteriorating ownership affordability is pushing many Canadians (including in the Kelowna area) towards the rental market and keeping others who might have moved up the housing ladder in it. Soaring immigration is also boosting rental demand as newcomers typically rent in their first few years in Canada.”
READ MORE: Putting 'slumping' Kamloops, Okanagan real estate prices into perspective
To contact a reporter for this story, email Rob Munro or call 250-808-0143 or email the editor. You can also submit photos, videos or news tips to the newsroom and be entered to win a monthly prize draw.
We welcome your comments and opinions on our stories but play nice. We won't censor or delete comments unless they contain off-topic statements or links, unnecessary vulgarity, false facts, spam or obviously fake profiles. If you have any concerns about what you see in comments, email the editor in the link above.
