Community Counselling & Resource Centre

Peterborough vacancy rate 1.1% and remains one of the lowest in Ontario for a second year in a row

http://www.thepeterboroughexaminer.com/2017/11/29/peterborough-vacancy-rate-11-and-remains-one-of-the-lowest-in-ontario-for-a-second-year-in-a-row

November 29th, 2017

Peterborough had a rental vacancy rate of just 1.1 per cent in October and for the second year in a row it was one of the lowest vacancy rates of all the major centres in Ontario, the Canada Mortgage and Housing Corporation reported Tuesday.

"The rental market in Peterborough remained one of the tighter markets in Ontario with rental supply and demand unchanged from the 2016 survey," CMHC market analyst Olga Golozub stated.

The vacancy rate is virtually unchanged from a year ago when it was 1 per cent in October 2016, according to the Peterborough Rental Market Report from CMHC, and it appears there is no end in sight to the trend.

Peterborough's vacancy rate had ranged between 2.4 per cent and 6 per cent between 2007 and 2015.

Several factors have combined to keep Peterborough's vacancy rate for the past two years low, according to CMHC.

For one thing, no new rental apartment buildings, condominium apartments or assisted housing units were completed this year in Peterborough, according to the report, although the addition of the Regency Retirement Residence in Lakefield and the Kawartha Heights retirement building in the city's west end could have helped absorb some potential demand for rental housing, just not enough to move the vacancy rate needle.

An increasing senior population in Peterborough has kept demand from seniors for rental housing high: in the past two years Peterborough has seen its population of people over 70 rise by 4.4 per cent, while the population of 15- to 44-year-olds has dipped by 0.2 per cent.

The dramatic rise in house prices in Peterborough over the past year, coupled with rising mortgage rates, has made it harder for renters to make a move to home ownership. Mortgage carrying costs soared by 22 per cent this year compared to a year ago in Peterborough, the report states.

This has resulted in a 15.5 per cent rental turnover rate in Peterborough, which is also one of the lowest in Ontario (only Toronto at 14.5 per cent and Oshawa at 14.7 per cent have lower rates).

"The low vacancy rate meant that tenants looking for a new apartment would have difficulty finding something that met their needs," the report states.

"Another reason turnover is low in Peterborough is that the probability of moving to homeownership diminishes as people age. Peterborough is the census metropolitan area with the oldest age structure in Ontario. Tenants close to retirement are unlikely to move out of rental."

Average rents in Peterborough were up 2.8 per cent in October from a year earlier, CMHC reported, even though the rent control guideline is 1.5 per cent.

Downtown Peterborough rents are increasing at twice the rate as rents in non-downtown areas, CMHC reported.

Bachelor apartments in Peterborough now have an average rent of $705 with a vacancy rate of 0.8 per cent; for one-bedroom apartments it's $850 and 1.2 per cent; two bedrooms $988 and 1.1 per cent and three or more bedrooms $1,190 and 0.4 per cent.

Last month the CMHC also issued its annual Housing Outlook Report for Peterborough, predicting average home resale prices of between $373,000 and $386,000 next year and between $376,000 and $394,000 in 2019.

Home prices and sales have been soaring since 2014 and even crashed through the $400,000 average price level for a brief time earlier this year.

The Housing Outlook predicts sales ranging between 2,750 and 2,850 units next year and between 2,650 and 2,850 in 2019, with total new housing starts of between 330 and 400 next year and between 330 and 430 in 2019.

Peterborough's rental vacancy rate will remain low for the next two years at 1 per cent next year and 1.2 per cent in 2019, the Housing Outlook forecasts.

The CMHC reports cover the Peterborough census metropolitan area, which has a population of about 124,500 and includes the city, Selwyn, Cavan Monaghan, Douro-Dummer and Otonabee-South Monaghan townships along with Curve Lake and Hiawatha First Nations.


Economic recovery in oil provinces helps lower national vacancy rate: CMHC

By Ross Marowits

THE CANADIAN PRESS

The economic recovery in Western Canadian oil-producing provinces contributed to the first decrease in the national apartment vacancy rate in three years, the Canada Mortgage and Housing Corporation said Tuesday.

In its 2017 Rental Market Report, the federal agency said the vacancy rate for purpose-built rentals in Canadian cities with at least 10,000 people fell to three per cent in October, down from 3.7 per cent a year earlier.

That returns the national vacancy rate to its 10-year average after a two-year spike.

“We’re finding that demand is strong for rental in Canada, including in some of the oil-producing sectors that were not performing as well over the last couple of years,” said Gustavo Durango, senior market analyst at CMHC.

In a sign that Alberta continues to adapt to the 2014 oil price shock, the province had Canada’s third-largest growth in occupied rentals after Ontario and Quebec.

Michael Markidis of Desjardins Capital Markets said it’s a sign that “the bleeding has stopped in most of the major markets located in oil-producing provinces.”

Alberta’s vacancy rate fell to 7.5 per cent in October from 8.1 per cent a year earlier, led by Lethbridge which was down 3.4 percentage points to 5.1 per cent.

“It still has a high vacancy rate relative to Alberta’s history but it’s off the peak that we saw the last couple of years,” said Durango.

Nationally, demand outpaced supply. The number of rental apartments increased by 1.2 per cent or 23,000 in the last year, about half the growth rate noted last year.

Demand was helped by high levels of international migration, improving employment for young adults and the ongoing aging of the population.

High home purchase prices also kept younger households in the rental market longer as they saved for down payments, said Durango. That’s particularly a factor in high-price markets like Vancouver and Toronto, where rental vacancy rates are very low.

Despite low vacancy rates in Ontario and B.C. there is adequate access to rental housing in some form in almost all centres, said Canadian Federation of Apartment Associations president John Dickie.

Between 22 and 38 per cent of all condos in Ontario and the West are rented and a “secondary market” of basements, suites and other units make up more than 40 per cent of total rental supply.

“The secondary market provides a flexible housing supply, which is often lower priced than the primary market,” he said in a news release.

Associations chairman David Hutniak called on the federal government to examine tax policy for rental buildings, while provinces and cities need to look hard at their development charges and planning approval delays.

“Those are the factors holding back much-needed, purpose-built rental supply,” he stated.

Vacancy rates were lowest in the B.C. cities of Kelowna and Abbotsford-Mission at 0.2 per cent and highest in Saskatoon at 9.6 per cent.

Metropolitan Vancouver was at 0.9 per cent, Toronto one per cent, Montreal 2.8 per cent, Ottawa 1.7 per cent, Edmonton seven per cent and St. John’s 7.2 per cent.

The average national monthly rent for a two-bedroom rental apartment rose 2.8 per cent to $989, outpacing inflation of around two per cent.

Rent increases were greatest in Kelowna at 8.6 per cent and fell by 1.3 per cent in Saskatoon and Edmonton.

Average monthly rents for two-bedroom apartments were highest in Vancouver at $1,552, Toronto $1,404 and Calgary $1,247. They were lowest in Trois-Rivieres,Que., at $594.

The average vacancy rate for condominium rentals declined to 1.6 per cent from 1.9 per cent a year earlier.

Average two-bedroom condo rentals were highest in Toronto at $2,000 and lowest in London, Ont., at $996.