Canada Mortgage and Housing Corporation (CMHC) released their fall rental market report yesterday showing that the vacancy rate in Edmonton has risen substantially since October 2008 from 2.4% to 4.5% (the highest rate since 2005). According to the report the increase did not from from construction of new rental units but from higher unemployment, lower net migration, rising homeownership demand (higher affordability) and competition from condo units purchased by investors and offered to the rental market.
With the vacancy rate on the rise rents have dropped slightly – the average rent for a two bedroom apartment was down from $1034/month last fall to $1015. The number of landlords offering incentives to tenants has moved higher as well (incentives such as free rent, extra appliances, free cable, parking or high speed internet were mentioned).
Nationally the average vacancy rate was 2.8%. Looking at other cities across Canada, the highest vacancy rates were seen in Windsor, Abbotsford, Peterborough, Calgary and London with the lowest rates in Regina, Quebec City, St. John's, Winnipeg and Victoria. The most expensive rents are still found in Vancouver, Calgary and Toronto.
For 2010 a reduction in apartment completions combined with strengthening rental demand should allow vacancies to move down toward the 3.7% level by the fall, according to the report. CMHC expects property owners will look to raise rents by about $25/month to offset rising operating costs such as property taxes and utilities by next fall.
