Kelowna’s housing market will continue to shift, as the city now has one of the largest vacancy rates in Canadian Metropolitan areas, according to the Canadian Mortgage and Housing Corporation’s (CMHC) annual rental market report.
In the CMHC’s report, based on data ranging from January to October, the Greater Kelowna area – which also inclues Peachland, Lake Country, West Kelowna and Rutland – has the highest vacancy rates amongst areas over 100,000 people in Canada at 6.3 per cent.
Vacancy rates in the Central Okanagan ranks the fifth highest community in the country, with only a few small metropolitan areas such as: Wood Buffalo, Alta. at 13.2 per cent; Portage la Prarie, Man. at 8.4 per cent; Selkirk, Man. 7.2 per cent; and Saugeen Shores, Ont. at 8.2 per cent surpassing it.
Inside the Greater Kelowna area, Rutand has the highest vacancy rates in the metro district at 7.5 per cent. The City of Kelowna’s vacancy rate has jumped from last year from 3.7 to 6.9 per cent and West Kelowna has jumped from 3.7 to 5.3 per cent.
Areas surveyed seperately in the Okanagan, such as Vernon and Penticton have seen their vacancy rates double as well. The Vernon region is seeing their rental vacancy rate at 3.4 per cent this year, up from 1.1 per cent last year. Penticton and area has jumped from 1.2 per cent vacancy to 2.6 per cent.
Data for Peachland, Lake Country, Westside Road, and Joe Rich are not yet available.
Rent’s on the rise
At the same time, the average price of rent has increased in nearly every market in the Okanagan.
Rent remains highest in the City of Kelowna at $1,916 per month. Rutland and West Kelowna have comparable rent pricing at montly averages of $1,888 and $1,868 respectively.
West Kelowna was spared from market price increases, as the average rent dropped by four dollars on average from last year.
Vernon and Penticton are seeing significantly cheaper rental prices than Kelowna at $1,406 per month in Vernon and an average of $1,387 per month in Penticton. This is still higher than what was offered last year in those regions, with Vernon seeing an average increase of $93 and Penticton increasing by $62.
Construction slowing down
After a spur of building in 2024, as CMHA recorded that the construction of new housing units seeemd to have returned to levels comparable to 2022 and 2023.
From January to October this year, construction has started on 2,314 housing units including single-homes, semi-detached units, row units and apartments in the Central Okanagan, according to the report.
During the same time frame last year, construction was started on 3,719 units, while in 2023, 2,540 units started construction.
The majority of construction from January to October of this year took place in Kelowna and were apartments, totalling 1,762 rental and condo units. In total, there were 1,978 units, with the rest accounting for 111 single-family homes, 87 row homes, and 18 semi-detached homes.
The slowdown aligns with the decrease in residential building permits being approved by the City of Kelowna over the last year where only 1,603 of those were given the go-ahead.
It’s an over 60 per cent decrease in building permits approved from the previous year, 2023 in which 4,039 permits were issued leading to the increase in construciton starts in 2024.
The City’s current housing target is 1,870 to 2,650 units to be added annually, according to the Housing Needs Assessment.
The CMHC report can be found on its website.