Canada’s rental market shows the lowest number of available apartments in more than 20 years

According to the latest report by Canada Mortgage and Housing Corp. (CMHC), the national apartment vacancy rate went down to 1.9% in 2022, marking the lowest level in more than 20 years. Such results can be explained by an additional number of newcomers Canada has welcomed and growing home prices pushing many residents out of the housing market.

Meanwhile, the number was 3.1% in 2021, when the country began to reopen after the previous lockdowns. Right now, we can see the tightest rental market since 2001 when the vacancy rate was 1.7%, CMHC says.

“What I see here is the strong stress in the rental system,” – noted Aled ab Iorwerth, CMHC’s deputy chief economist.

Canada’s biggest rental markets have faced particular stress, with Toronto’s apartment vacancy rate going down to 1.7% last year from 4.4% in 2021, Montreal showing a drop from 3.7% to 2.3%, and Vancouver reporting a decline from 1.2% to 0.9%.

CMHC says it reflects higher net migration, the return of students to the campus, and the increase in borrowing costs. Higher mortgage rates mean that many residents could not qualify for a mortgage and were forced to stay in their rental units. As a result, the demand for rentals has outpaced the hike in new housing built over the previous year.

The Corp’s report is based on a thorough survey of apartment buildings in 37 of Canada’s largest metropolitan areas. The survey is conducted every October, collecting data on rental prices, turnover, and vacancy-unit rate. The results apply to apartment units that were specifically built for renting. Many of them are older, so they are cheaper than condos owned by investors.

In certain areas, bidding wars have started in rental markets, increasing the competition and pushing up rental prices. In 2022, the national average monthly rental price for a two-bedroom apartment went up by 5.6% to $1,258.

Toronto and Vancouver kept their leading positions: Vancouver reported an average monthly rental price of $2,002, Toronto showed $1,765, and Victoria – $1,699.

The lack of apartments specifically built for rent has made condos a major supplier of rentals. Condos accounted for 19.3% of the total rental supply in Canada, with the largest share of 42.5% reported in Vancouver.

 

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