National Rental Vacancy Rate Stabilizes at 2.7 per cent
OTTAWA, December 15, 2005 — The average rental apartment vacancy rate in Canada's 28 major centres1 was unchanged at 2.7 per cent in October 2005 compared to last year, according to the Rental Market Survey released today by Canada Mortgage and Housing Corporation (CMHC). This follows three consecutive increases in the vacancy rate over the 2002 to 2004 period. The vacancy rate remains below the average of 2.8 per cent observed over the 1995 to 2004 period.
"Thanks to a solid economy and strong job creation, household formation has been healthy, which has promoted demand for both ownership and rental housing," said Bob Dugan, Chief Economist at CMHC's Market Analysis Centre. "The stabilizing of the vacancy rate across the major centres reflects a number of factors. As the majority of new immigrants initially settle in rental housing, high levels of immigration have been a key driver of rental demand over the past year. Also, across most centres, more renters are remaining in rental units as the gap between the cost of home ownership and renting increased in 2005. These two factors have put downward pressure on vacancy rates over the past year."
"On the other hand, home ownership demand remained very strong, which can be seen from the record level of existing home sales in 2005. Strong home ownership demand continues to apply upward pressure on vacancy rates. Adding to this is the high level of condominium completions in some centres. Condominiums are a relatively inexpensive form of housing that are often purchased by renter households switching to home ownership. In some cases, condos supplement the rental market as they may be purchased by investors who, in turn, rent them out. Therefore, high levels of condominium completions have created competition for the rental market and have put upward pressure on vacancy rates."
"Even though the average rental apartment vacancy rate has moved higher in recent years, many households are still facing affordability issues across Canada. Either these households need to move to less expensive units or require additional help to make their monthly shelter costs more affordable. In many cases, however, there are not enough vacant units to meet the needs of all households in core housing need. Therefore, additional affordable housing units continue to be required," said Bob Dugan.
The major urban centres with the lowest vacancy rates were Victoria (0.5 per cent), Sherbrooke (1.2 per cent), Québec (1.4 per cent), Vancouver (1.4 per cent), Trois-Rivières (1.5 per cent), Calgary (1.6 per cent), and Greater Sudbury (1.6 per cent).
Vacancy rates in British Columbia were up in two of the three major centres. However, increased employment opportunities attracted people to the resource-dependent areas of the province, stabilizing rental demand. Victoria remains the tightest metropolitan rental market in Canada as the vacancy rate fell by 0.1 percentage point to 0.5 per cent. In Vancouver, the vacancy rate increased slightly by 0.1 percentage point to 1.4 per cent, while the Abbotsford vacancy rate increased by 1.0 percentage point to 3.8 per cent.
Average rents for two-bedroom apartments increased in 25 of the 28 major centres. However in 15 of the 25 major centres where rents were up, the increases were small. The greatest increases occurred in Kitchener, Victoria, and Quebec where rents were up 6.0 per cent, 4.8 per cent, and 4.2 per cent, respectively. Overall, the average rent for two-bedroom apartments across Canada's 28 major centres increased by 1.6 per cent in October 2005 compared to last year.
The highest average monthly rents for two-bedroom apartments were in Toronto ($1,052), Vancouver ($1,004), and Ottawa ($920), while the lowest were in Trois-Rivières ($474) and Saguenay ($472).
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