Multi-family real estate in Vancouver is undergoing a major correction as a boom in inventory coincides with lower immigration and population, though some experts say the market could tighten back up toward the end of the decade.
Nearly 24,000 rental units are expected to be delivered in the region over the next two years, adding significant supply and intensifying leasing competition, according to Cushman & Wakefield ULC.
Record construction completions in 2025 and high deliveries in 2026 are pushing down rent growth and creating tenant-friendly conditions, said a first-quarter report from the firm released in May.
It could take several years to absorb existing inventory, with meaningful rent growth unlikely to resume until 2028, when longer-term supply constraints could re-emerge if development activity slows and immigration resumes, said the firm.
Supply has outpaced demand for several quarters, pushing vacancy up and rents down particularly for new rental product, said David Venance, executive vice-president with Cushman & Wakefield.
“This is a cyclical normalization after an overheated period, it’s not a structural weakening,” he said.
Brand-new rental apartment buildings underwritten during the pandemic and completing now are more exposed to declining rents than mid-level or legacy assets built decades ago, he said.
Investors are applying risk-adjusted returns and seeking a higher cap rate—a measure of a property’s financial performance—to make up for the fact that today’s rents might not be achieved next year, Venance said.
There is also rising loan-to-value pressure. Declining asset values are pushing some sellers toward near-100-per-cent loan-to-value positions, prompting increased use of incentives by developers to bolster rent rolls and support valuations.
“Demand hasn’t disappeared, it just hasn’t kept pace with supply,” Venance said.
Greg Ambrose, vice-president with Colliers Canada, said government and First Nations projects like Sen̓áḵw are driving much construction, and that the new Canada-B.C. partnership could be a solution for the glut of condo supply, though he questioned the livability of smaller units.
Nine years of NDP government has negatively affected the economy and therefore demand, he said, pointing to five credit-rating downgrades in the past five years, a $13.3-billion deficit projected for 2026-27 and the drop in B.C.’s population by over 41,000 people in 2025.
At the same time, Canada’s population has declined due to fewer temporary workers and international students, contributing to a repricing of rental apartment buildings.
For investors, it’s now a buyer’s market in an asset class that has traditionally favoured vendors, Ambrose said.
With housing starts down significantly, fewer new projects now may mean reduced supply in the near future, he said.
“I suspect 24 months from now, we could be surprised by how quickly the rental market may tighten up with reduced supply and potentially new government policy around population growth,” he said.
Outside of Metro Vancouver, purchasers are chasing a little bit more yield, said Carey Buntain, principal with Avison Young (Canada) Inc. This is to compensate for the greater risk of softer rents and lower immigration to secondary markets.
In addition to record new inventory, listings of apartment buildings are rising, giving investors more options and forcing sellers to compete on price, he said.
Demand is being driven primarily from the private investor market, he said. About 70 per cent of transactions involve private, local investors, typically legacy apartment operators who are looking to expand their portfolio when they see good value.
Institutional buyers, on the other hand, have been very selective, while non-profit demand is waning due to tighter public funding, Buntain said.
Infrastructure, rapid transit expansion and abundant land make suburbs like Langley and Coquitlam growth areas with long-term promise, while Greater Victoria and Nanaimo may benefit from net migration and strong lifestyle appeal, he said.
source: Richmond News photo: Chung Chow, BIV
