Apartment vacancy rates have dropped considerably in Penticton, but remain will above the extremely low rates seen in the mid-2000s.
According to a report released this week by the Canadian Mortgage and Housing Corporation, the vacancy rate for private apartments in Penticton for April 2012 is 4.2 per cent. That’s still higher than the provincial average of 3.4 per cent but much lower than the six per cent recorded for April 2011. It’s also consistent with the 4.4 per cent vacancies they reported in October 2011, which was slightly higher than the previous fall.
“It has certainly come down,” said Paul Fabri, CMHC’s market analyst for the B.C. Interior. “It remains, as with most centres in the Okanagan, well above what we experienced in the mid-2000s.”
Penticton has the lowest vacancy rate of the major Okanagan communities, though Kelowna and Vernon also reported lower vacancies at 5.2 and 6.3 per cent respectively. Fabri expects the trend towards lower vacancy rates to continue, though at a slower rate.
“I think we will continue to see vacancy rates edge lower over the next couple of years,” he said. “Probably over the next year, it will be very gradual, which, again, is consistent with what we expect to see in other Okanagan communities.”
There are, he said, a number of factors contributing to the trend, including job creation and the resulting decline in the unemployment rate, which has helped to support demand for rental housing, along with more people coming to the Okanagan.
“We are continuing to see population growth, and in most centres you haven’t seen a lot of new supply come on stream,” said Fabri. “Typically there hasn’t been a lot of rental accommodation built in most centres in B.C. over the last 10 years or so. In the last couple of years, we have seen a little more of it being built in some centres.”
The fluctuating vacancy rates have also had an effect on the cost to rent an apartment, with the average rent for a one-bedroom in Penticton at $658, a decrease of $6 from the previous year. While Fabri said rents can’t be compared from community to community, he said it is typical that when vacancy rates go up, the level of rent increase slows.
“It might not necessarily go down, it might be stable,” said Fabri, adding that rents in Penticton flattened out when vacancy rates rose dramatically in the late 2000s. “For example, what we’ve seen in Penticton, when (vacancy) rates went up, you saw the level of increase become smaller, and then in this last survey, rents have been essentially stable.”
It’s a trend that is also mirrored provincially. According to the CMHC report, the pace of rent increase between April 2011 and April 2012 was moderate at 2.3 per cent, and in line with the general rate of consumer price inflation in B.C. For one-bedroom apartments, which make up more than half of the purpose-built rental stock in the province, the annual increase in the same sample rent was 2.1 per cent in April 2012, up from 1.7 per cent in April 2011.