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Canadian rental vacancy rate inches down
The average rental apartment vacancy rate in Canada's 28 major centres decreased slightly by 0.1 of a percentage point to 2.6 per cent in October 2006 compared to last year, according to the Rental Market Survey released this month by Canada Mortgage and Housing Corporation (CMHC)...
"Solid job creation and healthy income gains helped to strengthen demand for both ownership and rental housing, said Bob Dugan, Chief Economist at CMHC's Market Analysis Centre. High levels of immigration were a key driver of rental demand in 2006, as was the increasing gap between the cost of home ownership and renting. These factors have put downward pressure on vacancy rates over the past year."
"However near record levels of existing home sales and the high level of housing starts in 2006 show that home ownership demand remained very strong, and it 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 type of housing for renters moving to home ownership. Also, some condominium apartments are owned by investors who rent them out. Therefore, high levels of condominium completions have created competition for the rental market and have put upward pressure on vacancy rates.
The centres with the highest vacancy rates in 2006 were Windsor (10.4 per cent), Saint John (NB) (6.8 per cent), and St. John’s (NFLD) (5.1 per cent). On the other hand, the major urban centres with the lowest vacancy rates were Calgary (0.5 per cent), Victoria (0.5 per cent), and Vancouver (0.7 per cent).
Regional variations
In British Columbia, vacancy rates declined in Vancouver (down 0.7 of a percentage point to 0.7 per cent) and Abbotsford (down 1.8 percentage points to 2.0 per cent) between October 2005 and October 2006, but were unchanged in Victoria (0.5 per cent). The rapid growth of British Columbia’s population and the higher cost of homeownership continue to fuel strong rental demand. For a third year, Victoria remains one of the tightest metropolitan rental markets in Canada.
In the Prairies, vacancy rates were down in four of the five metropolitan areas. Very high net migration to the region and a significant jump in mortgage carrying costs due to higher home prices put downward pressure on vacancy rates. Edmonton’s vacancy rate decreased by 3.3 percentage points to 1.2 per cent between October 2005 and October 2006 the sharpest drop among Canada’s major centres. Vacancy rates decreased to 3.2 per cent in Saskatoon (down 1.4 percentage points) and to 0.5 per cent in Calgary (down 1.1 percentage points).
In Ontario, vacancy rates were lower in five of 11 major centres and unchanged in two. The rising cost of homeownership, high immigration, and improved job prospects for youth were largely responsible for boosting rental demand across the province. These factors helped offset upward pressures on vacancies triggered by higher condominium and rental apartment completions. The vacancy rate in Ottawa decreased by one percentage point to 2.3 per cent, while in Toronto the vacancy rate declined 0.5 of a percentage point to 3.2 per cent.
Vacancy rates went up in three of Quebec’s six major centres and remained unchanged in one. Low mortgage carrying costs continued to draw renter households toward homeownership. This, combined with weak job opportunities for youths, held back growth in rental demand. Completions of rental units targeting seniors also helped boost vacancy rates in some Quebec centres. Gatineau’s vacancy rate increased from 3.1 per cent in October 2005 to 4.2 per cent in October 2006, while the vacancy rate in Montréal increased by 0.7 of a percentage point to 2.7 per cent over this period. Québec saw a modest 0.1 percentage point increase in its vacancy rate to 1.5 per cent.
In the Atlantic region, vacancy rates increased in both St. John's (NFLD) (up 0.6 of a percentage point to 5.1 per cent) and Saint John (NB) (up 1.1 percentage points to 6.8 per cent). The vacancy rate in Halifax edged down by 0.1 of a percentage point to 3.2 per cent. Slower employment growth, out-migration, and low mortgage carrying costs have weakened demand for rental housing and put upward pressure on vacancy rates in Atlantic Canada.
The highest average monthly rents for two-bedroom apartments in new and existing structures were in Toronto ($1,067) and Vancouver ($1,045), followed by Calgary ($960) and Ottawa ($941). The lowest average monthly rents for two-bedroom apartments in new and existing structures were in Trois-Rivires ($488) and Saguenay ($485).
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