CMHC Spring Rental Market Report – Vacancy Rates Move Higher
Tenants in Ontario are enjoying greater choice in apartment availability, as CMHC’s spring 2014 rental market survey pointed to vacancy rates increasing to 2.8% from 2.6% one year ago.
Ontario’s availability rate, which includes vacant units plus rental units where existing tenants are moving and a new tenant has not signed a lease, also increased from 4.5% to 4.9% year-over-year. Some major cities are seeing very high levels of apartment availability, such as in London (7.7% availability) and Ottawa & Sudbury (6.6%).
| TABLE 1 Average Vacancy – Five Year Trend
(Percent of Private Sector Apartments) |
|||||
| Area | Apr 2010 | Apr 2011 | Apr 2012 | Apr 2013 | Apr 2014 |
| Ontario Average | 3.4% | 2.5% | 2.3% | 2.6% | 2.8% ▲ |
| Barrie | 4.7% | 1.9% | 2.0% | 2.9% | 2.1% ▼ |
| Guelph | 4.6% | 1.9% | 1.0% | 1.6% | 1.7% ▲ |
| Hamilton | 4.1% | 3.5% | 2.9% | 3.7% | 3.9% ▲ |
| Kingston | 2.2% | 1.7% | 1.6% | 2.4% | 3.4% ▲ |
| Kitchener-Waterloo | 3.1% | 1.8% | 2.0% | 3.4% | 3.6% ▲ |
| London | 4.0% | 4.7% | 3.7% | 3.1% | 3.6% ▲ |
| Oshawa | 3.7% | 3.0% | 1.9% | 1.6% | 1.6% ■ |
| Ottawa | 2.4% | 1.8% | 2.1% | 3.7% | 3.2% ▼ |
| Peterborough | 6.6% | 2.3% | 2.3% | 3.4% | 3.7% ▲ |
| St.Catharines/Niagara | 4.8% | 3.6% | 4.0% | 3.5% | 3.8% ▲ |
| Sudbury | 5.4% | 3.1% | 3.1% | 3.1% | 3.1% ■ |
| Thunder Bay | 2.9% | 2.1% | 1.8% | 2.4% | 2.4% ■ |
| Toronto | 2.7% | 1.6% | 1.5% | 1.6% | 1.9% ▲ |
| Windsor | 12.4% | 9.4% | 7.7% | 6.3% | 5.0% ▼ |
| Source: Canada Mortgage and Housing Corporation (CMHC) Rental Market Report – Ontario Highlights – Spring 2010 to 2014
|
|||||
CMHC also reported that:
· Rent increases were also down, with the average 2-bedroom annual rent increase in Ontario at just +2.7%, compared to +3.0% in spring 2013. The average annual rent increase for all unit types was +2.3% (existing structures only).
· Notable factors exerting upward pressure on vacancy rates include: less international migration to Ontario and more condominium rental completions.
· Vacancy rates were highest for 2-bedroom apartments (3.0%) and lowest for 3-bedroom apartments (2.4%).
· Including apartment and townhouse units, in April 2014 there were 18,614 vacant private sector rental units with an average rent of $1,016/month.
· The strongest markets from April 2013 to April 2014 were observed in Oshawa (+3.9%) and Guelph (+3.6%). The smallest rent increases were in Ottawa (+0.9%), Peterborough (+1.5%) and London (+1.6%).
2015 Rent Guideline = 1.6%
In June 2014, the Ontario government also set the 2015 Rent Guideline at 1.6%. While this is higher than the 0.8% rent increase limit set for 2014, it will present a challenge for landlords who face higher cost increases such as water (+7.4%), insurance (+5.4%), energy/heating (+4.6%) and maintenance/ repairs (+2.2%)[1]. Energy costs rose by +13.0% from May 2013 to May 2014[2].
| TABLE 2 Average 2-Bedroom Rents – Five Year Trend
(Private Sector Apartments) |
|||||
| Area | Apr 2010 | Apr 2011 | Apr 2012 | Apr 2013 | Apr 2014 |
| Ontario Average | $978 | $980 | $1,014 | $1,046 | $1,072 |
| Barrie | $970 | $976 | $991 | $1,055 | $1,052 |
| Guelph | $876 | $892 | $908 | $942 | $967 |
| Hamilton | $868 | $856 | $876 | $922 | $943 |
| Kingston | $895 | $966 | $980 | $1,027 | $1,057 |
| Kitchener-Waterloo-Cambridge | $858 | $877 | $904 | $936 | $960 |
| London | $862 | $873 | $896 | $920 | $921 |
| Oshawa | $905 | $920 | $944 | $943 | $1,005 |
| Ottawa | $1,061 | $1,056 | $1,104 | $1,130 | $1,136 |
| Peterborough | $891 | $882 | $915 | $910 | $941 |
| St.Catharines/Niagara | $807 | $830 | $843 | $868 | $896 |
| Sudbury | $823 | $877 | $891 | $920 | $940 |
| Thunder Bay | $759 | $762 | $813 | $834 | $862 |
| Toronto | $1,134 | $1,124 | $1,164 | $1,202 | $1,241 |
| Windsor | $736 | $761 | $770 | $780 | $801 |
| Source: Canada Mortgage and Housing Corporation (CMHC) Rental Market Report – Ontario Highlights – Spring 2010 to 2014
|
|||||
CMHC reported that, while Ontario has seen more purpose-built rental units added in recent years, most of the growth in rental accommodation has come from the condominium sector. New purpose-built rental housing starts in the 4th quarter 2013 amounted to 737, down from 820 rental starts in the 4th quarter of 2012[3].
[1] Average Annual % Change, 2002-2012. Statistics Canada CANSIM Table 326-0020
[2] Statistics Canada, CANSIM, table 326-0020 and Catalogue nos. 62-001-X and 62-010-X. 2014-06-20.
[3] CMHC, Housing Now, Ontario Region, January 2014.
