Housing demand still outpacing supply as national vacancy rate drops
Canada’s national vacancy rate has dropped for the second year in a row. The country’s demand for rental housing is rising higher than our supply, based on a few key factors unique to our growing population.
In the annual Canada Mortgage Housing Corporation (CMHC) rental market survey, 2018’s national vacancy rate has dropped to 2.4%, down from 3% the year previous, according to CTV News.
CMHC is basing this declining rental availability on the rising demand for housing units in the country; more and more people are looking for rental units as housing accomodation this year.
The number of occupied units rose by 2.5% in October 2018 versus 1.9% the year previous.
Ontario, British Columbia and Manitoba saw their vacancy rates increase slightly. Since rental prices are generally higher in these provinces than elsewhere, people are likely leaving these provinces to find cheaper housing in neighbouring markets.
Quebec, Alberta, Saskatchewan and the Atlantic provinces, where housing is generally cheaper, saw their vacancy rates drop “amid steady demand for rental units” according to the housing agency.
“The decrease in the vacancy rate was attributable in part to the strong increase in international migration,” said CMHC’s deputy chief economist Aled ab Iorwerth. “This factor, combined with the growth in youth employment and the aging of the population, drove up demand for rental housing.”
International immigration rose by 23% over the first half of 2018 compared to the year before. Newcomers often rent when they first arrive to a country, which means they have to compete with younger people moving out to find their first rentals and seniors in some cases.
Employment rates have improved for the demographic between 15 and 29 years old, and stricter mortgage rules have forced some prospective homebuyers to stay in the rental world for much longer than preferred.
“If you look at rental rates in some of the other major cities across the world, it’s $3000-$4000 for two or three bedroom units in places like Manhattan and San Francisco,” said one real estate analyst. “So essentially, we’ll head in those directions. Will people take on roommates until they’re 40 years old? Will they live with their parents longer? Will they not move to the GTA? Those are obviously all questions that could impact that number.”
From October 2017 to October 2018, the national average price for a two-bedroom apartment rose to $987, an increase of 3.5%. This increased rental rate is higher than the inflation rate over the same time period.
Vancouver has the highest average monthly rent for a two-bedroom ($1,649), followed by Toronto ($1,467) and Calgary ($1,272).
The most affordable rent in the country comes from the Trois-Rivières region in Quebec ($601).