A slowdown in the flow of people coming to Alberta and an increase in the number of apartments available for them to live in has removed some of the sizzle from the province’s hot rental market — including in Red Deer.
Canada Mortgage and Housing Corp.’s most recent rental market survey, which was conducted in October, found that the average apartment vacancy rate in the province’s largest urban centres was 2.1 per cent. That was up from 1.6 per cent for the same month in 2013.
In Red Deer, the average vacancy rate went from 1.9 per cent to 2.2 per cent during the same one-year period.
“Following a record high of 86,922 people in 2013, net migration in the first half of 2014 declined 11 per cent year-over-year, largely due to a steep decline in non-permanent migrants,” CMHC said in its rental market report for Alberta.
It added that more than 2,000 rental units were added to urban centres with more than 10,000 people between October 2013 and October 2014 — the consequence of previously low vacancy rates and rising rents attracting developers.
“Further additions to the rental market universe will occur in future surveys, as there were over 5,000 rental units under construction in September 2014,” said CMHC.
Ekaterina Kortava, a regional market analyst with the national housing agency, said demand for rental accommodation in Red Deer is being affected by the same combination of reduced in-migration and more apartment units. Sixty-seven new apartments were added to the local rental pool at the end of 2013, she said. This resulted in a net increase of 24 units — to 4,584 — when factors such as conversion of existing rental units to condominiums were taken into account.
“There were plenty of completions in the second half of this year,” added Kortava, placing that tally at 266.
“So these units will be calculated in the next survey.”
In Red Deer, average vacancy rates in October varied from 1.8 per cent in the case of two-bedroom and three-plus-bedroom units, to 3.0 per cent when it came to bachelor suites.
Despite the higher vacancy rates, CMHC found that rents still moved upward during the year. Looking only at apartments that existed last October and the same month this year, the average rent for a two-bedroom unit in Alberta’s larger urban centres climbed 5.7 per cent. In Red Deer, the increase was 5.6 per cent.
However, rents are being impacted by the reduced demand for rental accommodation, said Kortava.
“If there is more supply available in the market, then this releases the pressure on increasing the rent. So definitely, the increase in average rent will moderate as more supply comes into the market.”
The average monthly rent for new and existing two-bedroom apartments in Alberta communities with 10,000-plus people was $1,238 in October. The numbers ranged from $795 in Medicine Hat to $2,118 in the Regional Municipality of Wood Buffalo, with Red Deer coming in at $966.
Lacombe was tied with Canmore for the lowest October 2014 vacancy rate, at zero per cent, among the communities considered by CMHC. Its average rental rate for a two-bedroom apartment was $817.
The vacancy rate in Sylvan Lake for the same month was 5.6 per cent, with an average rent of $956 for two-bedroom apartments.
Kortava pointed out that smaller communities have fewer rental properties, so their vacancy rates are more likely to fluctuate.