Canada just witnessed its lowest rental vacancy rate since 2001

Canada Mortgage and Housing Corporation (CMHC), the country’s national housing agency, released its rental market report for the year 2022 on Thursday morning.

Key observations in the report included a near-historic dip in the national rental vacancy rate, which dropped to 1.9% from 3.1%. A rate that low has not been seen in the True North in 22 years.

Demand has steadily remained higher than supply, even though the rental construction rate soared in 2022. It is the highest it’s been since 2013.

Our 2022 Rental Market Report is out now.

Last year, #rental construction saw its highest rate of increase since 2013.

Yet, growing demand was higher than supply with the national vacancy rate dropping to 1.9%.

This is the LOWEST rate we’ve seen in Canada since 2001.

1/5 pic.twitter.com/S1fTCOR3mh

— CMHC (@CMHC_ca) January 26, 2023

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According to CMHC’s observations, the demand for rental housing is so high because of a few possible reasons: Immigration rates have gone up, students are returning to campus after the pandemic and need to rent living spaces, and home ownership costs have gone up.

CMCH

The Bank of Canada announced seven interest rate hikes last year, making it even more difficult for Canadians to buy a home. This year has already seen another rate hike of 25 basis points.

“Renters in cities across Canada are seeing the impact of low vacancy rates in the amount they pay for rent,” notes CMHC. “The average rent increase for a two-bedroom in 2022 jumped to 5.6%. This is a new annual high. Growth has averaged 2.8% since 1990.”

Average rent growth for two-bedroom units that turned over to a new tenant was
well above average rent growth for units without turnover (18.2% vs. 2.8%).

CMCH

This accelerated affordability challenges, especially with inflation making Canadians’ lives harder.

Full-time employment among people aged 15 to 24 also went up 18% over 2022.

Incentives popular with landlords include free rent for one or two months, reduced pricing for internet services and cable, as well as move-in bonuses.