Canadians hunting for an apartment are feeling the squeeze as rental availability dropped for the third straight year to reach a 17-year low, the Canada Mortgage and Housing Corp said Wednesday.
The tightening market is pushing rental rates higher as the economy remains strong, high home prices keep more people renting, and rising immigration helped Canada hit record population growth last year.
The national vacancy rate for purpose built apartments was 2.2 per cent, down from 2.4 per cent in 2018, compared with an average of three per cent for the ten years prior. The vacancy rate for condo rentals was even tighter at one per cent, down from 1.4 per cent a year earlier.
The squeeze helped push up average rents by 3.9 per cent for a two-bedroom rental apartment, the fastest pace of same-sample rent growth since 2001.
“Low vacancy rates in major centres underscore the need for increased rental supply to ensure access to affordable housing,” CMHC chief economist Bob Dugan said in a statement.
The Greater Toronto Area has seen an increase in purpose-built rentals coming onto the market, even as developers still favour condo buildings. New rental housing coming onto the market helped ease the region’s vacancy rate to 1.5 per cent from 1.2 per cent a year earlier.
“It is encouraging to see more rental starts in the market. However, demand for rental still significantly outweighs the available supply,” said Dana Senagama, principal market analyst in the GTA report.
The still-low vacancy rate helped push up the average rent for a two-bedroom apartment by 6.1 per cent to $1,562, while a two-bedroom condo rental averaged $2,476.
Metro Vancouver’s vacancy rate held steady at 1.1 per cent, helping push up rental rates for a two-bedroom apartment by 4.9 per cent to $1,748, the highest of major markets. Condo rentals for a two-bedroom averaged $2,045 in the area.
CMHC said that despite record construction of new units in the area, strong demand for rental accommodation resulted in continued low vacancy rates and higher rents across Metro Vancouver.
Montreal’s vacancy rate declined to 1.5 per cent from 1.9 per cent a year earlier to reach the lowest rate in 15 years. The average rent for a two-bedroom apartment was $855.
Prairie cities saw much higher vacancies for dedicated rentals, including Regina at 7.8 per cent, Calgary at 3.9 per cent, and Winnipeg at 3.1 per cent. While Calgary’s vacancy rate was unchanged, it saw an overall average price increase of 1.7 per cent, with two-bedroom apartments going for an average of $1,305.
CMHC conducted the annual rental apartment survey for urban areas over 10,000 in October, while secondary rental condo market numbers for 17 markets were gathered in September.