The vacancy rate for purpose-built rental apartments hit its lowest level since data collection began in 1988, as strong demand and “vastly insufficient” supply combined to send rents surging last year, according to a report from Canada’s national housing agency.
The average rent for two-bedroom, purpose-built rental apartments in the 17 Census Metropolitan Areas surveyed by Canada Mortgage and Housing Corp. jumped eight per cent to $1,359 from $1,250 in the last 12 months, after rising 5.6 per cent the previous year, the report found.
Kevin Hughes, CMHC’s deputy chief economist, said there was a persistent imbalance between the demand for rental housing and the available supply.
“Again in 2023, strong rental demand continued to outpace supply in communities across the country, making it very difficult for renters to find housing they can afford,” Hughes said. “The vacancy rates and rent increases we are observing are further evidence the current level of rental supply in Canada is vastly insufficient and the need to increase this supply is urgent.”
The current level of rental supply in Canada is vastly insufficient and the need to increase this supply is urgent
Rental prices surged across major cities, with Calgary and Edmonton experiencing the sharpest increases at 14.3 per cent to $1,695 and 6.4 per cent to $1,398, respectively. Toronto ($1,940), Montréal ($1,096) and Vancouver ($2,181) also reported substantial upticks in rental costs.
The overall vacancy rate dropped to a low of 1.5 per cent. Vancouver retained its position as Canada’s tightest major rental market with a vacancy rate of 0.9 per cent, while Calgary and Toronto tied for second. Factors contributing to Calgary’s tight rental market included heightened interprovincial migration and international migration.
Montréal’s vacancy rate dropped to pre-pandemic levels, while both Calgary and Edmonton recorded their lowest vacancy rates in a decade.
In the condominium apartment sector, the average rental rate for a two bedroom unit increased from $1,929 in 2022 to $2,049 in 2023, accompanied by a decline in the vacancy rate from 1.6 per cent to 0.9 per cent.
Looking ahead, Hughes does not foresee significant changes in the rental market conditions.
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“Given the current levels of demand and the fact that we’re still in a housing context where affordability is an issue and supply is definitely under what we would need to regain affordability –– we don’t see much change in the rental market,” Hughes said.
“So conditions will continue to be tight and the market rents will be increasing.”
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