Rising interest rates, tougher mortgage regulations and elevated home prices are sparking more interest in the rental markets in Calgary and Edmonton these days.
Add continued uncertainty about the overall economy and labour market as well as declining home prices and places listed for rent become fairly hot commodities.
Matt Danison, CEO of Rentals.ca, which lists properties for rent across Canada, said all those factors are contributing to heightened demand in the rental market.
“The demand’s only going to increase in 2019 for Calgary. Edmonton’s going to be flat. In Calgary, we’re predicting a four per cent increase (in rental rates) for 2019,” said Danison.
Ben Myers, president of Bullpen Research & Consulting Inc., a boutique residential real estate advisory firm, said many Millennials today are choosing not to buy for various reasons, including costs and the tighter mortgage rules.
“They like the flexibility to live wherever they want, to be able to move and not worry about selling, especially in Calgary, where you’ve seen some decline in house prices in the last couple of years,” said Myers.
“When you have declining prices . . . it just makes people nervous about purchasing. It may be their preferred way to live – to own something – but they don’t want to buy unless they think prices are going to go up.”
In Calgary, the federal agency said the apartment vacancy rate significantly decreased for the second consecutive year to 3.9 per cent in 2018 from 6.3 per cent in 2017. The average two-bedroom rent was $1,272 in October 2018 compared to $1,247 in October 2017, added the report.
CMHC said this is the second consecutive year of declining vacancy rates, representing a significant tightening of the rental market. Supply in the primary rental market continued to post strong gains in 2018, growing by 3.7 per cent. Purpose-built rental apartments increased by 1,407 units from 38,160 in October 2017 to 39,567 in October 2018. However, demand outpaced supply: 2,268 additional units were occupied in October 2018 compared to last year.
In Edmonton, CMHC said the apartment vacancy rate was 5.3 per cent in October 2018, down 1.7 percentage points from last year. The average two-bedroom rent was $1,246 in October 2018 compared to $1,215 in October 2017.
The CMHC said the vacancy rate in the Edmonton region declined despite a 2.4 per cent increase in primary rental market supply. Purpose-built rental apartments increase by 1,638 units from 67,432 in October 2017 to 69,070 in October 2018. Demand outpaced new supply as 2,698 additional units were occupied in October 2018 compared to last year.
Canada’s overall vacancy rate declined for the second year in a row to reach 2.4 per cent (3.0 per cent in 2017), bringing the vacancy rate for apartments in the primary rental market below the average of the last 10 years (3.0 per cent).
Higher vacancy rates in Calgary and Edmonton are fuelled by a higher level of rental housing inventory.
The Rentals.ca January monthly rental report found one-bedroom and two-bedroom average rents in December 2018 to be:
- Calgary: one-bedroom, $1,270; two-bedroom, $1,448;
- Edmonton: one-bedroom, $1,081; two-bedroom, $1,300; and
- Fort McMurray: one-bedroom, $1,236; two-bedroom, $1,345.
The overall average rent for the 25 markets surveyed in Canada was $1,776l.
More extensive coverage of the rental market across Canada can be found in Rentals.ca’s Rental Market Predictions for 2019 report.