June 19, 2009
Economic Snapshot — June 19, 2009
Rental markets have softened over the past year but not by much
By John Clinkard, Consulting Economist, CanaData
Across Canada’s 35 largest metro areas, the average rental apartment vacancy rate edged up slightly in April of this year to 2.7% from 2.6% in April of 2008. This small increase in the average vacancy rate for the country as a whole masks considerable regional variation.
However, according to CMHC, a slight increase in the number of renters who purchased a first home, plus an increased supply of rental apartment condos (owned by investors) contributed to the increase in apartment vacancy rates.
At the same time, rental demand may have been supported by an increased number of renters who postponed purchasing a house during a period of extreme uncertainty regarding the economic outlook.
Across the country, Saskatchewan had the lowest rental vacancy rate followed by Manitoba (2.0%), Newfoundland and Labrador (2.0%), Québec (2.3%) and British Columbia (2.3%). Provinces with relatively high rental vacancy rates include New Brunswick (4.7%), Alberta (4.6%) and Nova Scotia (3.8%). Rental vacancy rates in Ontario averaged 3.3% in April 2009 compared to 3.1% a year earlier.
On a metro area basis, the indirect and direct impact of declining energy investment appears to have caused a very pronounced increase in rental vacancy rates in Calgary where the average vacancy rate jumped from 2.0% to 4.3%, its highest level since 2003.
Other significant increases in rental vacancy rates occurred in Abbotsford (from 2.4% to 4.8%), in Halifax (from 3.2% to 3.8%) and in Edmonton (from 3.4% to 4.7%).
Despite the weak economic conditions in most regions, rental vacancy rates declined over the past year in Regina (from 1.4% to 0.7%), in St. John’s, NF (from 3.7% to 2.2%), in Charlottetown (from 5.2% to 3.5%), in Saint John, NB (from 4.3% to 4%) and in Québec City (from 1.1% to 0.6%).
Looking forward, the slight increase in rental vacancy rates suggest that the market overall has softened during the past twelve months. However, the fact that at 2.7%, the overall vacancy rate is close to its five-year average, suggests that rental demand should start to pick-up late in 2009 or early in 2010.
John Clinkard has over 30 years experience as an Economist in international, national and regional research and analysis with leading financial institutions and media outlets in Canada.
Rental Vacancy Rates In Selected Metro Areas – 2009 vs 2008
Data source: Canada Mortgage and Housing Corporation (CMHC).
Chart: Reed Construction Data – CanaData.
