National vacancy rate falls, demand still outpacing supply: CMHC
Canada’s overall vacancy rate dropped for a second year in a row, as demand for rental housing grew at a faster pace than supply, according to the Canada Mortgage Housing Corp.
In its annual rental market survey, the housing agency said Wednesday in 2018, the vacancy rate across the country was 2.4 per cent, down from three per cent in 2017.
CMHC said demand for rental housing grew at a faster pace than supply. It found that the number of occupied units climbed by 2.5 per cent in October 2018, compared with an increase of 1.9 per cent in the same month a year earlier.
Ontario, B.C. and Manitoba all saw small increases in its vacancy rates, while Quebec, Alberta, Saskatchewan and the Atlantic provinces all saw declines amid steady demand for rental units, the agency said.
“The decrease in the vacancy rate was attributable in part to the strong increase in international migration,” said Aled ab Iorwerth, CMHC’s deputy chief economist.
“This factor, combined with the growth in youth employment and the aging of the population, drove up demand for rental housing.”
The agency said international immigration climbed by 23 per cent in the first half of the year, compared with the same period a year earlier, tightening vacancy rates because newcomers often rent when they first arrive.
It also attributed the decline to a growth in the senior population and an improvement in the employment rate among 15- to 29-year-olds that may have led to more young adults leaving the family home for rentals.
Real estate analyst Ben Myers said the introduction of a stricter mortgage stress test, along with rising interest rates, can also be blamed for the decline in vacancy rates and rising rents in the country’s biggest cities as more people opt to rent.
“If you look at rental rates in some of the other major cities across the world, it’s $3000-$4000 for two or three bedroom units in places like Manhattan and San Francisco,” said Myers, president of Toronto-based Bullpen Research and Consulting Inc.
“So essentially, we’ll head in those directions. Will people take on roommates until they’re 40 years old? Will they live with their parents longer? Will they not move to the GTA? Those are obviously all questions that could impact that number.”
The CMHC report, which looked at purpose-built rental units and leased condo apartments, found the average national rent for a two-bedroom apartment jumped by 3.5 per cent to $987 from October 2017 to October 2018. This increase was higher than the inflation rate during this period.
B.C. saw the largest climb in rent, with Kelowna recording an 9.4 per increase. Saskatchewan, the province with the highest vacancy rates, saw rents go down slightly, by 0.5 per cent in Regina.
In October, Vancouver had the highest average monthly rent for a two-bedroom apartment at $1,649, followed by Toronto at $1,467 and Calgary at $1,272.
Trois-Rivieres, Que., had the lowest average monthly rent in October at $601, followed by Saguenay, Que., at $608 and Sherbrooke, Que., at $639.