Edmonton rental market shrinking due to migration and rising mortgage rates

The rental market in Edmonton is tightening because of an influx in migration and renters holding off on making the jump to being homeowners due to rising mortgage rates.

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

It found that in Edmonton, rental demand is outpacing increases in supply, resulting in a shrinking in the rental market.

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CMCH

According to CMHC’s observations, rental demand was also supported by provincial in-migration. In-migration was at its highest recorded level as of the second quarter of 2022, the latest data point available. This was due, in part, to quarterly net international migration setting a record in the second quarter: just over 25,000 net newcomers to the province. Almost half of the international migrants in the second quarter were non-permanent residents. This signalled that some of the demand from in-migration could be from students.

CMCH

The report also found that the vacancy rate for purpose-built rental apartments in the Edmonton CMA declined to 4.3%, compared with 7.3% one year earlier.

The number of occupied units grew by 5,163 over the past year, the largest single-year increase in occupancy on record. Growth in occupancy outpaced the increase in the apartment rental universe of 3,020 units. This was also one of the largest increases in supply on record.

Rising mortgage rates in the ownership market have also led to a higher monthly cost of owning versus being in the rental market, resulting in existing tenants possibly choosing to remain in their rental units longer before moving to ownership, adding to the rental demand.

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.