Canada is experiencing a nationwide shortage in rental properties
Canadians looking to purchase real estate aren’t the only ones dealing with a tough market, renters across the country are also facing hardships when it comes to finding a place to live.
According to Canada Mortgage and Housing Corporation’s (CMHC) 2017 Rental Market Survey, vacancy rates are on the decline, and with it comes a spike in costs.
The average vacancy rate for purpose-built rental apartment units across Canadian centres with a population of 10,000 or more decreased from 3.7% in October 2016 to 3.0% in October 2017, states the CMHC. Vancouver and Toronto have some of the lowest purpose-built rental vacancy rates, with Vancouver sitting at 0.9% and Toronto at 1%.
The average monthly rent for a two-bedroom purpose-built rental apartment across the nation is now $989, with Vancouver experiencing a 6.2% increase and Toronto a 4.2% increase over the past year.
In its survey, CMHC describes the primary (also known as purpose-built) rental market, consists of “occupied units in privately initiated, purpose-built rental structures of three units or more.” The rental survey looks at both the primary and purpose-built rental market, along with the secondary rental market covering condominium apartments, although both showed signs of vacancy decline.
“Nationally, increased demand for purpose-built rental apartment units outpaced growth in supply, leading to a decline in the vacancy rate and a reversal of the trend we’ve seen over the last two years,” said Gustavo Durango, Senior Market Analyst at CMHC. “Demand for purpose-built rental apartments can be attributed to historically high levels of positive net international migration, improving employment conditions for younger households and the on-going aging of the population.”
Looking at the condo rental market, which the CMHC lists as a secondary rental market, vacancy rate declined from 1.9% to 1.6% in October this year.
And among the cities surveyed, the highest rental condominium rent was in Toronto ($2,301), followed by Vancouver ($1,874) and Ottawa ($1,566).
“Condominiums are typically newer and tend to offer a greater range of amenities than purpose-built rental apartments, which is reflected in generally higher rents for condominium rental apartments,” states the CMHC in its survey.
While the CMHC has listed condos in its survey, it didn’t add the potential effects that Airbnb is having on the rental properties, particularly in the most expensive cities such as Toronto and Vancouver.
According to a City report released this summer, the number of Airbnb listings in Toronto has tripled between 2014 and 2016, with 15,869 listings and over 10,000 properties rented in 2016. Within those rentals, 65% were listings for the entire unit, while 35% were for a room within a unit.
And Vancouver is no different. Even before a short-term rental bylaw passed this month, the City of Vancouver estimated that up to 6,000 short-term rentals are currently in operation.
With condo owners being able to rent out their properties for over $150 a night, it’s no wonder their vacancy rates are quickly declining.