Calgary’s rental market is projected to remain more or less the same in 2021, while other Canadian cities’ asking rent could rebound up by as much as 6% by the end of the year.
In Rentals.ca’s 2021 rental report, findings predict that rent prices could go even lower in the first four to five months of 2021, but may then increase through much of the country towards the end of the year.
According to the report, which gathered insight from housing experts from across the country, the average rental rates could rise by 3% over the year. Asking rents are forecast to increase by 4% in Toronto, 6% in Montreal, and 3% in Vancouver, while staying flat here in Calgary.
Based on a report from Canada Mortgage and Housing Corporation released in January, the average cost of rent for a one-bedroom apartment in Calgary is $1,087 per month. Two-bedrooms are the most expensive option, with an average rent of $1,323.
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There has been a rising vacancy rate in the city, with downtown Calgary having the largest vacancy increase at 8.8% last year compared to 3.4% in 2019.
Rental demand has decreased due to a combination of the economic impact of the pandemic, oil sector job losses, and the border closure leading to restricted immigration.
A continued rise in rental supply, with a steady pace of rental building completions in 2020 at an increase of 3.2%, has also played a role in the lower demand.
“Forty-five percent of the rental supply increase in 2020 was in the downtown and northwest, where 26.7% of Calgary’s primary rental apartments are,” outlines Rentals.ca, “The southeast also had an 11.5% increase in rental supply this year, while containing 6.2% of Calgary’s primary rental supply.”
The average rent in Calgary rose slightly to $1,195 as property owners use non-price measures to compete for tenants, with incentives such as free utilities, lower deposit fees, and cash bonuses.
Calgary’s 2021 rental market predictions
Andie Daggett, vice president of sales and client experience at Urban Analytics, doesn’t expect to see much change in Calgary’s rental market until at least the third quarter of 2021.
“The first half of 2021 will continue to see stable rents, as owners and developers continue to navigate the current economic conditions facing renters,” Daggett predicts.
However, the COVID-19 vaccine rollout may have a positive effect on the economy, allowing for more employment opportunities and job stability. In turn, this could lead to an influx of qualified renters, which means that owners and developers might begin increasing rents in the second half of 2021.
Many new rental properties in 2020 offered “one-month-free” incentives or discounted monthly rents, resulting in older buildings and buildings in suburban areas competing with these recently completed projects.
Daggett expects that incentives of this nature will continue into 2021. “It would be very difficult to remove a rental rate incentive,” she says, “without risking tenants moving out because they could no longer afford their rent.”
Another trend that could carry on into this year is virtual tours. “They take less time and are easier to organize for both parties: Leasing agents can show more units, and renters can view more buildings, speeding up the application and lease-signing process,” says Daggett, “They are a win-win for both parties.”
If not required to return to their offices downtown, renters may also be more flexible in the area of the city they live in, opting to live in larger or more affordable spaces outside of the city centre.
Rentals.ca says that rental properties in the urban core of Calgary have become increasingly competitive and are likely to remain so for the foreseeable future, given the amount of real estate product planned for these areas.
“Developers should consider opportunities in areas that are underserved,” says Daggett, “such as more established inner-city suburban communities.”