Did Vancouver's Airbnb restrictions make rent cheaper?

New research reveals just how much Vancouver renters have saved from the City restricting short-term rental (STR) operators like Airbnb.

The City of Vancouver first introduced its short-term rental regulations in 2018, which only allowed someone to list their principal residence on a site like Airbnb or Vrbo — meaning they couldn’t list a secondary unit like a basement suite or laneway house.

Years later, in 2024, B.C. followed suit, enacting similar restrictions across the entire province.

David Wachsmuth, a professor in urban planning at McGill, said that Vancouver has been a “pioneer” in strict short-term rental rules among Canada’s big cities.

“They really paved the way,” he said.

Wachsmuth and Cloé St-Hilaire, a postdoctoral researcher at the University of Waterloo, recently published a paper where they examined just how effective strict STR regulations in Vancouver and other cities across Canada have been, combing through six years of census metropolitan data and rental listings for all Canadian urban regions.

They looked at rents in cities that had implemented strict short-term rental regulations (like Vancouver), where STRs were restricted to primary residences. Then, they compared this to cities that hadn’t implemented the bans.

Wachsmuth said that the general “intuition” across Canada is that short-term rentals have contributed to rising rents, since units that would otherwise be someone’s home are taken off the rental market.

But he said that before this study, there had never been any definitive evidence of this. Further, even though there tended to be higher rents in neighbourhoods with lots of Airbnbs, there was also the possibility that the “neighbourhoods which are really attractive to tourists are also kind of just really attractive to local residents.”

Wachsmuth and St-Hilaire’s research, however, proves that STRs did in fact drive up rental costs, and that restricting them has been beneficial.

Before cities imposed restrictions on STRs, they didn’t stand out from the general trajectory of rents rising across Canada. Afterwards, however, they found that rents were rising more slowly than they otherwise would have.

The researchers found that a year after a city implements strong STR rules, rents are 1.7 per cent lower than they would have been otherwise.

“And that effect actually accumulates year after year, so after it’s been three or four years, you start to see pretty substantial decreases in rent compared to what you might have seen if the rules hadn’t been in place,” Wachsmuth said.

In 2023, they found that, on average, strict STR regulations saved Canadian renters $55 a month.

This means that Vancouver renters would be paying even more than what they are presently, if the City hadn’t enforced the STR regulations.

‘Low hanging fruit’

Wachsmuth added that other factors have much greater effect on bringing rental costs up or down.

“Short-term rentals are not the most important factor in what’s affecting the rental market; what’s interesting about them is that they’re the low-hanging fruit,” he said.

While “dramatically increasing the supply of rental housing” would drive down rents much more significantly, Wachmuth said that is something that is very hard to do.

Whereas if a city enforces strict STR regulations, it’s “50 bucks a month you can pretty much get.”