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National vacancy rate drops in 2008
12/24/08
The average rental apartment vacancy rate in Canada’s 34 major centres decreased to 2.2% in October 2008 from 2.6% in October 2007, according to the Rental Market Survey recently released by Canada Mortgage and Housing Corporation (CMHC).
“Demand for rental housing in Canada increased due to high migration levels, youth employment growth, and the large gap between the cost of homeownership and renting,‘’ said Bob Dugan, chief economist at CMHC’s Market Analysis Centre. ‘’Rental construction and competition from the condominium market were not enough to offset growing rental demand.’’
Between October 2007 and September 2008, 14,908 rental units and 50,794 condominium units were completed in Canada’s 34 major centres. Condominiums are a relatively inexpensive type of housing for renters moving to home ownership. Also, some condominium apartments are owned by investors who rent them out.
In October 2008, provincial vacancy rates decreased in most eastern provinces. Vacancy rates recorded a significant decline from last year in Newfoundland and Labrador (down one percentage point to 1.1%), Prince Edward Island (down 1.5 percentage points to 2.6%), and New Brunswick (down 1.7 percentage points to 3.6%).
In Nova Scotia, the rental vacancy rate increased to 3.5%.
Vacancy rates were moderately lower in Ontario by 0.6 percentage point to 2.7%, and Quebec by 0.4 percentage point to 2.2%.
Vacancy rates were lowest in Manitoba (0.9%), British Columbia (1.0%), Newfoundland and Labrador (1.1%), and Saskatchewan (1.2%). The strong economies in the western provinces continued to attract workers from the rest of Canada. Many of these newly arrived migrants initially settle in rental housing, keeping rental demand strong.
The rental apartment vacancy rate in Alberta rose to 2.5% this year, despite low levels of rental construction and further decline of the rental stock through condominium conversions. CMHC attributes some of the upturn in vacancies to slower net migration into the province and the constraining effect of rent increases in 2007. Competition from the secondary rental market and investor-owned condominium apartments have also contributed to the higher vacancies in the purpose-built commercial rental sector.
The centres with the highest vacancy rates in 2008 were Windsor (14.6%), St. Catharines-Niagara (4.3%), and Oshawa (4.2%). On the other hand, the major urban centres with the lowest vacancy rates were Kelowna (0.3%), Victoria (0.5%), Vancouver (0.5%), and Regina (0.5%).
The highest average monthly rents for two-bedroom apartments in new and existing structures were in Calgary ($1,148), Vancouver ($1,124), Toronto ($1,095), and Edmonton ($1,034), followed by Ottawa ($995), Kelowna ($967), and Victoria ($965). The lowest average monthly rents for two-bedroom apartments in new and existing structures were in Trois-Rivières ($505), Saguenay ($518), and Sherbrooke ($543).
Year-over-year comparison of rents in new and existing structures can be slightly misleading because rents in newly-built structures tend to be higher than in existing buildings. However, by excluding new structures, we can get a better indication of actual rent increases paid by most tenants. The average rent for two-bedroom apartments in existing structures increased in all major centres. The largest rent increases in existing structures were recorded in Saskatoon (20.%), Regina (13.5%), Edmonton (9.2%), and Kelowna (8.4%).
Overall, the average rent for two-bedroom apartments in existing structures across Canada’s 34 major centres increased by 2.9% between October 2007 and October 2008.
- CMHC
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