The Canada Mortgage and Housing Corporation released its latest Rental Market Survey, reporting a drop in the overall vacancy rate.
The data provides information on the primary, purpose-built, and secondary rental markets. Primary being privately initiated, purpose-built rental with three units or more, and secondary units being condo apartments offered for lease.
"Nationally, growth in rental housing demand outpaced growth in supply which led to the decline in the national vacancy rate,” says Aled ab Iorwerth, Deputy Chief Economist, CMHC. “A sharp rise in international migration combined with the aging of the population and employment growth among youth, has stimulated demand for rental housing."
The vacancy rate dropped for the second consecutive year, down to 2.4% (from 3% in 2017). The 10-year average vacancy rate in the primary market is 3%.
From October 2017 to October 2018, demand outpaced vacancies as the number of occupied units increased 2.6%. Vacancy rates did increase slightly in Ontario, British Columbia, and Manitoba. But, Ontario’s vacancy rate remained near historical lows at 1.8% (up from 1.6% in October 2017). Kingston had the lowest vacancy rate at 0.6% and Toronto was at 1.1%.
In the secondary market, the average vacancy rate fell from 1.6% in October 2017 to 1.4% in October 2018. Toronto’s vacancy rate of condo rentals came in at 0.7% while Hamilton’s was slightly higher at 0.9%. Vancouver had the lowest vacancy rate at 0.3%.
Looking for a two-bedroom condo to rent in Toronto? Hopefully you have a roommate (or two). Toronto had the highest rent for a two-bedroom condo, averaging $2,393 a month. Vancouver came in second at $2,034, and Kitchener-Cambridge-Waterloo made a surprising appearance in the top three most expensive with an average monthly rent of $1,614.
Recently, the province of Ontario scrapped rent control in an effort to increase supply. This is a controversial move because it’s not proven that rent control dissuaded developers from building purpose-built rental.
So basically, tenants were stripped of some protection with the hopes that more developers would build rental buildings without actually knowing whether rent control was impacting development decisions.
In the Greater Toronto Area, there is currently a record high amount of rental units in the proposal phase as of the third quarter of 2018, according to Urbanation. It seems like even with rent control, developers see the benefit of building more rental in the current state of our housing market.
It will be interesting to see if vacancy rates increase, and whether the lack of rent control plays a role.