For the second year in a row, Canada’s vacancy rate has dropped, according to the Canada Mortgage Housing Corporation (CMHC)’s annual rental market report, making clear that demand for rental housing in this country is far exceeding supply. And in many cities, that supply continues to get costlier.
The CMHC report, released on Wednesday, revealed that the overall vacancy rate across the country is now 2.4%, down from 3% in 2017. The report surveyed purpose-built rental units and condo apartments available for rent. From October 2017 to October 2018, the average rent for a two-bedroom apartment increased by 3.5 % — higher than the inflation rate during this period.
Vacancy rates increased in Ontario, British Columbia and Manitoba, but declined in Quebec, Alberta, Saskatchewan and the Atlantic provinces.
“The number of occupied apartments in the surveyed centres rose by some 50,000 units in October 2018, for an increase of 2.6% over October 2017,” the report states. Reasons for the rise include a strong increase in newcomers, as well as more young people gaining employment.
“When job markets improve, renter household formation follows, as some young adults are encouraged to leave the family home and seek rental accommodation,” the report states.
The third factor that contributed to the rise in occupied units is a growth in the aging population since the beginning of this year. According to the CMHC, those 65 and over are more inclined to rent.
Declining vacancy rates caused monthly rents to rise in places like Vancouver, Calgary and the GTA. The average monthly rent (for all types of units) in the GTA, for instance, was $2,385 in the third quarter of this year — a 7.6% annual increase, according to Q3-2018 data from Urbanation.
In October alone, Vancouver saw the highest average monthly rent for a two-bedroom apartment ($1,649), followed by Toronto ($1,467) and Calgary ($1,272). Saskatchewan, on the other hand, has the highest vacancy rate (8.7%) and its two major cities, Regina and Saskatoon, saw changes of less than 1% in monthly rents.
The CMHC runs its rental market survey during the first two weeks of every October in an effort to gauge the strength of the rental market. The survey targets urban centres with populations of 10,000 or more. Rental information and vacancy rates are provided by the owner, manager, or building superintendent via telephone interviews and site visits.