National rental vacancy rate decreases in 2008

December 11, 2008

NATIONAL RENTAL VACANCY RATE DECREASES IN 2008

OTTAWA, December 11, 2008 - The average rental apartment vacancy rate in Canada's 34 major centres decreased to 2.2 per cent in October 2008 from 2.6 per cent in October 2007, according to the Rental Market Survey released today 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 per cent), Prince Edward Island (down 1.5 percentage points to 2.6 per cent), and New Brunswick (down 1.7 percentage points to 3.6 per cent). In Nova Scotia, the rental vacancy rate increased to 3.5 per cent. Vacancy rates were moderately lower in Ontario by 0.6 percentage point to 2.7 per cent, and Quebec by 0.4 percentage point to 2.2 per cent.

Vacancy rates were lowest in Manitoba (0.9 per cent), British Columbia (1.0 per cent), Newfoundland and Labrador (1.1 per cent), and Saskatchewan (1.2 per cent). 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 per cent 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 per cent), St. Catharines-Niagara (4.3 per cent), and Oshawa (4.2 per cent). On the other hand, the major urban centres with the lowest vacancy rates were Kelowna (0.3 per cent), Victoria (0.5 per cent), Vancouver (0.5 per cent), and Regina (0.5 per cent).

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 (20.3 per cent), Regina (13.5 per cent), Edmonton (9.2 per cent), and Kelowna (8.4 per cent). Overall, the average rent for two-bedroom apartments in existing structures across Canada′s 34 major centres increased by 2.9 per cent between October 2007 and October 2008.

CMHC′s October 2008 Rental Market Survey also covers condominium apartments offered for rent in Calgary, Edmonton, Montréal, Ottawa, Québec, Regina, Saskatoon, Toronto, Vancouver, and Victoria. In 2008, vacancy rates for rental condominium apartments were below one per cent in four of the 10 centres surveyed. Rental condominium vacancy rates were the lowest in Regina, Toronto, Ottawa, and Vancouver. However, Calgary and Edmonton registered the highest vacancy rates for condominium apartments at 3.5 per cent and 4.3 per cent in 2008, respectively.

The survey showed that vacancy rates for rental condominium apartments in 2008 were lower than vacancy rates in the conventional rental market in Ottawa, Regina, Saskatoon, and Toronto. The highest average monthly rents for two-bedroom condominium apartments were in Toronto ($1,625), Vancouver ($1,507), and Calgary ($1,293). All surveyed centres posted average monthly rents for two-bedroom condominium apartments that were higher than average monthly rents for two-bedroom private apartments in the conventional rental market in 2008.


CMHC′s Rental Market Survey also gathers information on monthly rents in types of dwellings other than private apartments and condominium apartments, such as duplexes, and accessory apartments for 15 major centres.

The Rental Market Report for major centres also includes an affordability indicator for most centres. The rental affordability indicator is used to examine trends in rental affordability within a centre.

As Canada′s national housing agency, Canada Mortgage and Housing Corporation (CMHC) draws on more than 60 years of experience to help Canadians access a variety of quality, environmentally sustainable, and affordable homes – homes that will continue to create vibrant and healthy communities and cities across the country.
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CMHC's Rental Market Survey is conducted twice a year, in April and in October, to provide vacancy rate and rent information on privately initiated apartment structures containing at least three rental units.

For more information contact:
Julie Girard
CMHC Media Relations
Canada Mortgage and Housing Corporation (CMHC)
Phone: 613-748-4684
Email: jagirard@cmhc.ca

Stephanie Bento
CMHC Media Relations
Canada Mortgage and Housing Corporation (CMHC)
Phone: 613-748-2811
Email: sbento@cmhc.ca

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