Demand for rental housing rising
Garry Marr, Financial Post Published: Thursday, December 11, 2008
Rising home ownership costs are driving Canadians back into the rental market, according to a new report from Canada Mortgage and Housing Corp.
The Crown corporation said its survey of 34 major centres found the national vacancy rate fell to 2.2% in October 2008, down from 2.6% from a year earlier.
"Demand for rental housing in Canada increased due to high migration levels, youth employment growth, and the large gap between the cost of home ownership and renting," said Bob Dugan, chief economist at CMHC. "Rental construction and competition from the condominium market were not enough to offset growing rental demand."
CMHC said that between October, 2007 and September, 2008 there were 14,908 rental units constructed. During the same period, 50,794 condominiums units were completed.
"Some condominium apartments are owned by investors who rent them out," noted CMHC in its release.
Manitoba was the tightest province in the country for apartment rental with an overall vacancy rate of 0.9%. British Columbia was not far behind at 1%, followed by Newfoundland and Labrador at 1.1% and Saskatchewan 1.2%.
"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," said CMHC.
Alberta was the exception with the vacancy rate in the province rising to 2.5%, attributing the higher rate to slower net migration into the province and the constraining effect of rent increases in 2007.
Calgary was the most expensive city in the country to rent in with a two-bedroom apartment going for $1,148 per month. Vancouver was second at $1,124 followed by Toronto at $1,095. Sherbrooke was the cheapest city in the survey for a two-bedroom apartment with average price $543 per month.