The seasonally adjusted annual rate¹ of housing starts was 197,300 units in March 2010, according to Canada Mortgage and Housing Corporation (CMHC).

Seasonally adjusted annual rate estimates of housing start activity were also revised up for January and February². This resulted in month-over-month gains of 7.5 per cent in January (189,000 units), 6 per cent in February (200,400 units), and a slight decrease of 1.5 per cent in March.

“The moderation in March housing starts was due to a decrease in the volatile multiple starts segment. Helping to offset this was an increase in singles starts as well as more activity in rural areas,” said Bob Dugan, Chief Economist at CMHC’s Market Analysis Centre.

The seasonally adjusted annual rate of urban starts decreased by 4.2 per cent to 175,200 units in March. Urban multiple starts decreased by 15.2 per cent to 77,500 units while single urban starts increased by 6.9 per cent to 97,700 units.

March’s seasonally adjusted annual rate of urban starts increased by 13.5 per cent in Quebec and by 7.3 per cent in the Prairie region, but decreased by 16.3 per cent in British Columbia, by 15.5 per cent in Ontario, and by 8 per cent in Atlantic Canada.

Rural starts were estimated at a seasonally adjusted annual rate of 22,100 units in March³.

As Canada’s national housing agency, CMHC draws on more than 60 years of experience to help Canadians access a variety of high quality, environmentally sustainable and affordable homes. CMHC also provides reliable, impartial and up-to-date housing market reports, analysis and knowledge to support and assist consumers and the housing industry in making vital decisions.

The average rental apartment vacancy rate in Canada’s 35 major centres increased to 2.8 per cent in October 2009 from 2.2 per cent in October 2008. The centres with the highest vacancy rates in 2009 were Windsor (13.0 per cent), Abbotsford (6.1 per cent), Peterborough (6.0 per cent), Calgary (5.3 per cent), and London (5.0 per cent). On the other hand, the major urban centres with the lowest vacancy rates were Regina (0.6 per cent), Québec (0.6 per cent), St. John’s (0.9 per cent), Winnipeg (1.1 per cent), Kingston (1.3 per cent), and Victoria (1.4 per cent).

Demand for rental housing in Canada decreased due to slower growth in youth employment and improved affordability of homeownership options. Rental construction and competition from the condominium market also added upward pressure on vacancy rates.

The highest average monthly rents for two-bedroom apartments in new and existing structures were in Vancouver ($1,169), Calgary ($1,099), Toronto ($1,096), and Ottawa ($1,028). The lowest average monthly rents for two-bedroom apartments in new and existing structures were in Saguenay ($518), Trois-Rivières ($520), and Sherbrooke ($553).

Year-over-year comparison of rents in new and existing structures can be slightly misleading because rents in newly-built structures tend to be higher than in existing buildings. However, by excluding new structures, we can get a better indication of actual rent increases paid by most tenants. The average rent for two-bedroom apartments in existing structures increased in all major centres. The largest rent increases in existing structures were recorded in Regina (10.2 per cent), Saskatoon (8.3 per cent),Victoria (5.0 per cent), and St. John’s (4.9 per cent). Overall, the average rent for two-bedroom apartments in existing structures across Canada’s 35 major centres increased by 2.3 per cent between October 2008 and October 2009.

CMHC’s October 2009 Rental Market Survey also covers condominium apartments offered for rent in Calgary, Edmonton, Montréal, Ottawa, Québec, Regina, Saskatoon, Toronto,Vancouver, and Victoria. In 2009, vacancy rates for rental condominium apartments were below two per cent in seven of the 10 centres surveyed. Rental condominium vacancy rates were the lowest in Toronto, Saskatoon, and Ottawa. However, Regina and Edmonton registered the highest vacancy rates for condominium apartments at 3.0 per cent and 3.1 per cent in 2009, respectively.

The survey showed that vacancy rates for rental condominium apartments in 2009 were lower than vacancy rates in the conventional rental market in Ottawa, Saskatoon,Vancouver, Toronto, Edmonton, and Calgary. The highest average monthly rents for two- bedroom condominium apartments were in Toronto ($1,487),Vancouver ($1,448), Calgary ($1,310), and Victoria ($1,223). All surveyed centres posted average monthly rents for two- bedroom condominium apartments that were higher than average monthly rents for two-bedroom private apartments in the conventional rental market in 2009.

The vacancy rate throughout the St. John’s CMA (census metropolitan area) remained low in 2009. In fact, there was little change in the vacancy rate, which largely reflects the impact of solid economic activity and positive employment growth within the region. Robust residential construction activity, combined with healthy MLS®1 sales and a strong supply of existing homes for sale, translated into continued house price growth, once again making the transition from renting to home ownership challenging for renter households. CMHC’s rental market survey conducted during the first two weeks of October included the enumeration of 3,601 privately initiated apartment units within the St. John’s CMA. The survey identified 31 vacancies within the rental stock, translating into a vacancy rate of 0.9 per cent. This compares to a similar 0.8 per cent vacancy rate recorded in 2008, with the rate below one per cent now for two consecutive years and holding steady at its lowest level since 1980. The vacancy rate was one per cent or lower in every zone within the St. John’s area this year. The biggest change was within Remainder of Metro Area (zone 3), with a rate of 0.3 per cent compared to 0.8 per cent in 2008. St. John’s East (zone 1) posted a vacancy rate of 0.9 per cent versus 1.0 per cent last year. In St. John’s West (zone 2), the vacancy rate was 1.0 per cent compared to 0.7 per cent in 2008. St. John’s City (zones 1-2) posted a vacancy rate of 0.9 per cent versus 0.8 per cent a year earlier. Throughout the St. John’s region, vacancies remained highest in bachelor units at 1.5 per cent and lowest in three bedroom units at 0.4 per cent. The recorded vacancy rate for one and two bedroom apartments was 0.8 per cent for both. Average rents increased across the region for all bedroom types in 2009. The following percentage changes in average rent are based on the fixed sample, which includes structures common to the survey for both years (2008/2009). Bachelor unit average rents increased the most of all bedroom types at 6.2 per cent; one bedroom average rents increased 5.7 per cent; two bedroom unit average rents were up 4.9 per cent; and three bedroom rents increased 5.4 per cent. Overall, the total average rent for all bedroom types combined, advanced 5.5 per cent.

Based on the 2009 survey, bachelor unit average rents were $541; one bedroom average rents were $592; two bedroom units posted average rents of $677; and three bedroom rents came in at $713. Overall, the total average rent for all bedroom types combined was $643. The increase in average rents is a reflection of the upward pressure very low vacancies have exerted on rents since 2008, as well as increasing energy costs and the increased costs associated with operating and maintaining apartment buildings. Once again, current rent levels prevented the construction of multi-unit rental projects in 2009, making the rent/return equation uneconomical for developers and real estate investment trusts (REITs). This has been the situation for more than 20 years within the local rental market. However, local rental market dynamics have been changing, with fewer private owners and increasing corporate ownership. The buoyant St. John’s economy and housing market has seen these corporate entities become increasingly interested in the local rental market. In fact, they have purchased many apartment buildings in recent years. The expectation is that these and other players will engage in new multi-unit apartment building construction activity in the coming years, once average rents reach a point where project development becomes feasible.

The local rental market is driven by a number of factors. These factors have remained fairly constant over time and involve both demand and supply influences. Key factors affecting the demand dynamics for rental accommodations over the short term include economic activity, employment, migration trends and the home ownership rate. The supply side of the local rental market is affected by additions to the rental stock via new construction or conversion of existing space into apartments. Apartment supply can also be reduced by conversion activity when existing rental units get converted to condos or hotels. On rare occasions, demolition of apartments for alternate site use or loss due to fire may also diminish the supply of rental units. While CMHC’s rental market survey historically covered structures containing three or more apartment units only, both demand and supply has always been affected by competition from the secondary rental market (newly surveyed since 2007). This market consists of single-detached units; semi-detached, row and duplex units; and other- primarily accessory suites. Statistics for secondary rented units exclude apartments in purpose built rental structures with three rental units or more, condo apartments, units in institutions, and any dwelling whose type could not be identified in the survey. The estimated number of households in secondary rented units within the St. John’s CMA is quite substantial at 12,896, with an average rent of $653 compared to $618 in 2008. Refer to tables 5.1 and 5.2 for additional details regarding secondary rental market survey results.

Results from Canada Mortgage and Housing Corporation’s recently completed Rental Market Survey* revealed a higher vacancy rate for the Moncton CMA in the fall of 2009. In October of this year, the number of vacant units in Greater Moncton stood at 375. In comparison, there were 234 vacant units recorded at the time of last year’s Rental Market Survey. Consequently, the vacancy rate in Greater Moncton was up from last year’s level of 2.4 per cent to 3.8 per cent in the fall of 2009. The vacancy rate for the popular two bedroom units was consistent with the change in the overall vacancy rate, climbing from last year’s rate of 2.6 per cent to 3.6 per cent. This was not unexpected as two bedroom units account for approximately two thirds of the rental universe in the Moncton CMA. The vacancy rate for one bedroom units reached four per cent in the fall of 2009. This marked a significant increase from the low 1.5 per cent vacancy rate recorded last October. A general desire on behalf of local renters for the increased living space provided by two bedroom units has effectively reduced demand for one bedroom units. Within the tri-community area, Dieppe City had the lowest vacancy rate at 2.2 per cent, followed by the Town of Riverview and Moncton City at 3.4 and 4.0 per cent, respectively. In the outlying areas of the Moncton CMA, the vacancy rate rebounded from last year’s low of 0.9 per cent, climbing to 3.1 per cent. * The survey, completed during the first two weeks of October, is limited to privately initiated structures comprised of at least three rental units that were available for rent or completed before June 30, 2009.

In 2009, economic development in Greater Moncton continued to follow the same positive trend that has defined the region over the past decade. Overall employment, as of the end of October, was on pace to exceed last year’s record setting level. As a result of the stronger job market, Greater Moncton has enjoyed the strongest in-migration of all regions in the province during the past ten years. Housing market conditions in the Moncton CMA, starting last year, have become increasingly favorable to potential home owners. In particular, mortgage rates have remained at historically low levels and new listings have retreated moderately from record levels set in 2008. As a result, home ownership has moved within reach for a larger number of people in Greater Moncton, including those who currently are renters, thus limiting demand for rental units. In the tri-community area, the rental market in the Town of Riverview remained the most stable during the past 12 months, with the local vacancy rate remaining unchanged at 3.4 per cent. Rental unit demand had been on the rise in Riverview in recent years. Despite higher than average apartment starts in both 2007 and 2008, the vacancy rate declined in both years. In 2009, a decline in rental unit demand was offset by reduced rental unit construction, leading to the local vacancy rate remaining unchanged.

In Moncton City, the vacancy rate was comparable to the overall rate for the CMA at 4.0 per cent. Population growth has remained positive in Moncton City proper as the region’s economy continues to support economic development and attract people to the area. However, in-migration in 2009 has slowed compared to last year’s above average pace. In addition, apartment starts in Moncton City in 2008 were higher than the average for the last five years. This resulted in a relatively large infusion of new units in 2009 as projects started last year were completed. As such, local supply was ahead of demand with Moncton City’s vacancy rate rising to 4.0 per cent from last year’s level of 2.4 per cent. The vacancy rates in each of Moncton City’s four separate zones also increased in 2009. The largest fluctuation occurred in East Moncton. Last year, this zone posted Moncton City’s lowest vacancy rate at 1.9 per cent. In the fall of 2009, the vacancy rate in East Moncton was the highest at 4.6 per cent. In contrast, North Moncton had the lowest vacancy rate at 2.7 per cent. Not only was it the lowest, it was also the least changed among Moncton City’s four different zones, climbing 0.6 percentage points from last year’s rate of 2.1 per cent. In Central and West Moncton, the vacancy rate in the fall of 2009 was up to 4.5 and 3.6 per cent, respectively.

In the City of Dieppe, the vacancy rate inched up to 2.2 per cent in the fall of 2009, a moderate increase from 1.8 per cent last year. In general terms, population growth in Dieppe has outpaced both Moncton and Riverview in recent years. As a result, residential development has flourished in Dieppe. During this time, the popularity of semi-detached homes has increased resulting in tremendous growth in the Moncton CMA, with a significant number of new units added in the City of Dieppe as well. With semi-detached homes, consumers can obtain a newly-built product with a mortgage payment comparable to the typical monthly rent for a newer two bedroom apartment, while allowing the owner to build equity in their new home. As such, semi-detached units in Dieppe, which have nearly matched last year’s record setting pace in 2009, continue to lure renters to homeownership. This year, apartment starts are expected to post the third annual decline in Dieppe. However, with fewer consumers seeking rental units, supply and demand have maintained a relative balance, resulting in a moderate 0.4 percentage point change in Dieppe’s vacancy rate.

In 2001, the vacancy rate in Charlottetown reached a record low of 1.8 per cent, as the construction of rental units was somewhat limited throughout the 1990′s. In response to the low vacancy rate, local developers built higher levels of rental buildings from 2002 to 2006. This strong level of rental construction resulted in a rising vacancy rate from 2003 to 2007. Last fall this trend was reversed, as the vacancy rate declined for the first time in five years due to reduced rental construction in 2007 and 2008. However, the vacancy rate inched back up this year as rental starts are once again on the rise. The increased level of construction pushed the vacancy rate for apartment structures containing three or more units in the Charlottetown CA to 3.4 per cent up from 2.3 per cent last year. The October 2009 survey aggregated the rental information for 3,888 rental units in the Charlottetown area, which was up from the 2008 figure of 3,790 units. Of the surveyed units, 131 were vacant in 2009, compared to 86 vacant units during the same period last year. The 2009 survey revealed that vacancies among two-bedroom units, which make up the majority of the local rental universe, were higher with 78 vacant units, compared to 54 units last year. As a result, the vacancy rate for two-bedroom units rose to 3.1 per cent from 2.2 per cent last year. Among the other unit types the change was more pronounced. One- bedroom units recorded the largest change, as the vacancy rate for these units increased from 2.0 per cent last year to 4.4 per cent in 2009.

Overall, the average rent in Charlottetown was $658 per month in 2009. For the fourth year in a row, CMHC is measuring the change in rents for existing structures (i.e., those common to the current and previous years’ surveys). Focusing on existing structures excludes the impact of new structures added to the rental universe between surveys and provides a better indication of the rent increase for existing structures. For the Charlottetown CA, the average rent for all bedroom types in existing structures increased by 4.8 per cent in October 2009 compared to a year ago. This year’s increase of 4.8 per cent is very close to the 5.0 per cent increase allowed for heated premises by the Island Regulatory and Appeals Commission (IRAC), which manages residential rental increases on the Island. As most of the units in the Charlottetown area include heat in the rent, it is not unexpected that the actual increase mirrored the increase allowed by IRAC. In 2009, there was very little reason to discount rents now that all of the projects built over the past six years have been integrated into the market. Also, owners were looking to increase rents in an effort to make up for the high heating costs experienced in the 2007/2008 winter due to the rapid rise in the price of heating oil. There was a significant difference in the increase in two-bedroom rents recorded in Zone 1 (Downtown) and Zone 2 (Peripheral). In Zone 1, the average two-bedroom rent advanced by 3.9 per cent, while in Zone 2 the increase was more impressive at 5.8 per cent, as measured by the fixed sample.

In addition to the vacancy and rent data that is collected each year as part of the annual Rental Market Survey, landlords and property managers were asked about rental unit availability. A rental unit is considered available if the existing tenant has given, or has received, notice to move, and a new tenant has not signed a lease; or the unit is vacant. Based on the results from the 2009 Rental Market Survey, the availability rate in the Charlottetown CA moved up to 4.9 per cent in 2009 from last year’s level of 4.0 per cent. Within the CA, the availability rate was identical in both Zones 1 and 2 at 4.9 per cent. Among the different bedroom types, one-bedroom units posted the highest availability rate in 2009 at 5.8 per cent. The availability rate for bachelor and two-bedroom units was 4.8 per cent for both.

According to the 2009 Rental Market Survey, the largest apartment buildings in the Charlottetown area command the highest average rents and enjoy the lowest vacancy rates. In the October survey, apartment buildings in the Charlottetown area with between 50 and 99 units posted the lowest vacancy rate at 1.8 per cent, which was well below the overall vacancy rate of 3.4 per cent. The second largest buildings in the area, ranging from 20 to 49 units, also saw lower vacancies with a rate of 3.0 per cent. In addition to having the lowest vacancy rate, the largest buildings also commanded the highest average rents. Buildings with 50 to 99 units had an average rent of $760, while the smallest structures, those with three to five units recorded an average monthly rent of $608. This escalation of rents from smaller to larger buildings is logical, when considering that more amenities tend to be offered to tenants as the building size increases. These features such as elevators, underground parking, security measures and common rooms raise the construction and operating costs for owners, which in turn are passed on to tenants.

Demand for privately-initiated rental apartment units in the Windsor Census Metropolitan Area (CMA), switched gears and increased in 2009. The high vacancy rate declined from the record 14.6 per cent in October 2008 to 13.0 per cent in October 2009.Vacancy rates were lower for all apartment types except bachelors, where the vacancy rate increased to 16.9 per cent. Several key factors have contributed to the turnaround in the number of vacant rental apartments in Windsor this fall despite a slightly larger supply. Migration is a key factor in housing demand and outmigration from the Windsor area has lessened. Low unemployment rates draw migrants to a centre in search of work. Windsor’s unemployment rate has been well above the provincial average over the last five years. Not only has this poor employment scenario meant fewer people were moving to Windsor, it has also meant Windsor residents moved elsewhere in search of work. Now that the future regarding the Big Three auto makers is more stable and there is more positive news of upcoming employment opportunities, the number of people leaving the Windsor area is estimated to have peaked in 2008. Higher student enrollment has also exerted downward pressure on rental vacancy rates. In times of high unemployment and with the current government programs promoting retraining, both the University of Windsor and St. Clair College have recorded record high enrolment this fall. Many of these students turn to the rental market for accommodation. Many renters took advantage of favourable buying conditions to enter the homeownership market over the past two years as borrowing rates were low and home prices in the Windsor area were negotiable. As the bulk of this first-time buyer segment has moved through the market at this time, fewer renters were leaving this fall as prices began to recover. In contrast, renters were still leaving the townhouse segment due to the higher rents. The rent for a three-bedroom townhouse averaged $934 in October 2009, an amount which would easily allow for a monthly mortgage payment on a starter home in Windsor. The total vacancy rate for townhouse units increased from 11.7 per cent in 2008 to 12.5 per cent in 2009.

Vacancy rates were lower throughout the zones that make up the Windsor CMA. Downtown Windsor, Zone 1, declined slightly from 17.5 per cent the previous year to 15.6 per cent in 2009. The vacancy rate decreased for one and two bedroom units and was higher for bachelor units. Often renters move up to larger units as they become available. However, very high youth unemployment meant that demand was low for the most affordable rental accommodation. Zone 1 has traditionally had a higher vacancy rate than any other Windsor zone in part due to the large proportion of older structures which often require more repairs and therefore may be considered less desirable by potential tenants. On a positive note, the opening of a satellite campus for St. Clair College’s school of art and design brought about 200 students to the downtown this fall. Further expansion plans in conjunction with the University of Windsor’s music, theatre and fine arts programs could bring a further 700 students to the area within the next two years. The vacancy rate for one bedroom apartments was highest in Zone 2 at 18.9 per cent. This zone has a number of smaller buildings with primarily one bedroom apartments. Smaller buildings, such as those with less than 20 units tend to have higher vacancies during periods of oversupply as tenants have options and preferences for larger buildings which tend to have more security, and professional on-site management. Rents for one bedroom units in this zone remain low in an attempt to lure new tenants or retain existing occupants. Traditionally in Windsor the most popular location for renters to choose is Zone 3- East Outer which had the lowest overall vacancy rate in the City at 10.5 per cent, as well as the lowest one bedroom vacancy rate at 8.5 per cent. The latter was significantly lower than the one-bedroom vacancy rates in surrounding zones. This zone includes larger buildings with prime locations along the river which are more attractive to tenants. These buildings offer newer units and professional on-site management. As well the larger property management firms have the resources available to offer rental incentives which many smaller landlords do not.

The vacancy rate among apartments with at least three units (3+) in the Thunder Bay Census Metropolitan Area (CMA) inched up to 2.3 per cent in October 2009, from 2.2 per cent last year, according to Rental Market Survey (RMS) data released in December by Canada Mortgage and Housing Corporation (CMHC). (See Table 1.1.1) With the October vacancy rate’s slight increase, Thunder Bay now becomes the CMA with the tenth lowest vacancy rate for 33 centres with populations over 100,000 in Canada. Northern Ontario’s other major centre, Sudbury saw its rate rise to 2.9 per cent from 0.7 per cent last year. Meanwhile, elsewhere in Northwestern Ontario, Kenora’s vacancy rate declined to 0.8 per cent from 1.7 per cent in October 2008.

The vacancy rate in Thunder Bay was up only slightly this year as several opposing forces came into play. Improvement in homeownership affordability caused by falling interest rates has encouraged some renters to become homeowners. Low ownership costs in Thunder Bay combined with rising apartment rents reduced the relative cost of homeownership – dampening demand for rental accommodation. There are other factors that have added to rental demand and exerted downward pressure on vacancy rates. Although there has been a long-term out-migration amongst the 18 to 24 renter aged group, important trends emerged recently. Employment in the service sector and 18-24 age groups have held up reasonably well, possibly exerting slight upward pressure on rental demand, as young adults are more likely to rent rather than own. Overall, employment has fallen 5.5 per cent over the past year between the 2008 and 2009 surveys. However, the brunt of the job losses has been in the goods-producing sector and the 25-44 age group, arguably sectors not directly associated with rental demand. Next, demand coming from students in post-secondary institutions has increased rental demand. Enrolment in post-secondary institutions has been growing in Thunder Bay. Less space in student housing has caused spillover in the private market creating demand for units located in proximity to Lakehead University and Confederation College. Laid off workers returning to school as mature students are creating additional demand for private rentals. In addition, recent data has indicated no new sources of rental supply. Going back to 1998, there have been few rental completions added to the supply of rental units in Thunder Bay.

The availability rate1 is a slightly broader measure of what landlords have available to market to prospective tenants. The availability rate refers to the percentage of apartments that are either vacant or for which the existing tenant has given or received notice to move. Once again, availability rates moved in the same direction as the vacancy rate in Thunder Bay. Thunder Bay’s availability rate rose to 3.1 per cent from 2.7 per cent in 2008. Only one of the 15 metropolitan areas in Ontario had a lower availability rate than Thunder Bay, namely Kingston (2.5 per cent). Higher availability rates are a result of higher turnover. (See Table 1.4.)

A number of factors have exerted upward pressure on Sudbury’s vacancy rate. Between October 2008 and October 2009, employment in the mining and related service sector has fallen. The challenges facing global demand for stainless steel have impacted Sudbury’s nickel industry and services related specifically to this sector. While the latest migration results (2007-2008) for Sudbury CMA showed positive net in-migration for the sixth consecutive year, it is more likely that in-migration slowed as well since last fall due to less investment spending in the mining industry. Some of these residents affected by the changing fortunes of the nickel market, may have left Sudbury to find work causing the vacancy rate to rise if they resided in rental housing. Meanwhile, a slowing job market triggered less renter household formation, particularly among the core renter group of young adults aged 18-24, resulting in more young adults remaining in the parental home.

Another factor dampening rental demand has been the shift to homeownership. An improvement of homeownership affordability caused by falling interest rates has prompted some renters to become homeowners over the past year. Although overall sales are lower, affordable priced product is moving well suggesting first time buyers are active.

With the total stock increasing only marginally over the course of the year, changes in the vacancy rate are attributable to changes in rental market demand, rather than fluctuations in supply. There is only a slight change in the rental universe observed between October 2008 and 2009 underlining the lack of new supply or changes to the stock of rental units (See Table 1.1.3). There have been only 58 rental completions in the last ten years according to CMHC’s survey in Greater Sudbury, with 31 coming last year. While the overall vacancy rate climbed to 2.9 per cent, both one bedroom and two bedroom units saw vacancy rates rise by a similar magnitude. Sudbury’s one bedroom stock saw its vacancy rate rise to 2.8 cent from 0.9 per cent while the two bed apartment stock jumped to 2.5 per cent compared to 0.4 per cent last year. Units in direct competition with homeownership saw an increase in vacancy rates as young couples and/or unattached singles move from rental units into homeownership or leave the community altogether.

Renters are having an easier time finding accommodations in Victoria this year. A sluggish local economy and labour market, and a recent surge in homeownership has moved vacancy rates up. As the level of employment has edged lower, relatively fewer people have moved to the region. Historically low mortgage rates and lower home prices reduced monthly mortgage carrying costs, and encouraged some renters to exit the rental market in favour of homeownership. Near record levels of apartment condominium resales recorded across Greater Victoria during the second and third quarters of 2009 reflected this movement from rental to homeownership.

Vacancy rates for both apartments and town homes moved up in the Victoria CMA over the past year. The average apartment vacancy rate edged up to 1.4 per cent, following four years at 0.5 per cent. Similarly, the average vacancy rate for rental townhouses shifted up from 0.1 per cent last October, to 1.8 per cent in October 2009. The trend of increasing vacancies was widespread in the region. Higher vacancy rates were observed across all Greater Victoria municipalities. Both the one and two bedroom segments of the local apartment rental markets recorded increased vacancies. While apartment vacancy rates in Victoria increased in 2009, they remain low compared to other major British Columbia markets (2.1 per cent in the Vancouver CMA and 3.0 per cent in the Kelowna CMA) and the provincial average (2.8 per cent).1

Softer demand for rental housing in 2009 has put less upward pressure on rents. Average one and two bedroom apartment rents edged up 4.5 and five per cent in 2009, respectively.2 This growth was less robust than the 6.8 per cent average rent increase in 2008, when vacancy rates were at their lowest. A substantial range exists between the rents observed across Victoria CMA municipalities. For an average two- bedroom apartment, Oak Bay was home to the highest rents ($1,206), while the lowest rents were found in Esquimalt ($858). When compared to the provincial average, two-bedroom rents are on par, while average one- bedroom rents are eight per cent lower in Victoria.

Highlights – Gatineau

According to the results of the latest CMHC Rental Market Survey, the rental housing vacancy rate in the Quebec part of the Ottawa-Gatineau CMA reached 2.2 per cent in October 2009, up by 0.3 of a percentage point over a year earlier. The rental market therefore eased but still remained relatively tight. The proportion of vacant units in the metropolitan area was in fact slightly lower than the average for Quebec overall (2.3 per cent). The relative stability of the vacancy rate in the Gatineau area was attributable to the fact that the continued homeownership trend was counterbalanced by strong migration.

Gatineau was not the only area where the rental market showed little change, however, as this was also the case in the Montréal, Québec and Saguenay CMAs. On the other hand, conditions eased in Sherbrooke and Trois-Rivières, two areas where the job losses among young people slowed the rate of household formation. Lastly, in the Ontario part of the Ottawa-Gatineau CMA, the proportion of vacant units remained below the level recorded in Gatineau, rising from 1.4 per cent in October 2008 to 1.5 per cent a year later.

The small rise in the vacancy rate recorded in the Gatineau area was due in part to the job losses that occurred over the past year. Following a particularly good year for job creation in 2008, with an annual gain of more than 5 per cent, the first ten months of 2009 were marked by the elimination of some 5,000 positions compared to the average level for 2008. As is often the case in difficult economic times, the youngest workers sustained the greatest losses, with the average number of jobs among people aged from 15 to 24 years falling by about 4,000 between 2008 and 2009. The slightly tougher labour market conditions therefore limited household formation in this age group and removed some pressure on rental housing demand.

The homeownership trend also contributed to the increase in the vacancy rate in 2009. Despite the economic uncertainties that prevailed at the beginning of the year, the low mortgage rates and the contribution of the public service to the regional economy helped maintain housing starts at high levels. As well, the Gatineau area saw the construction of record numbers of row homes, semi- detached houses and condominium apartments–all housing types that are more affordable than single-detached homes and often preferred by renters accessing homeownership.

However, migration limited the easing of the rental market. In fact, the latest migration data released by Statistics Canada revealed that, between 2007 and 2008, there were 2,800 more in-migrants than out-migrants. It should be specified that, just like in previous years, it was the international component of net migration that contributed the most to the demand for rental housing. During this period, more than 1,000 new residents came from abroad. This trend likely continued in 2008/2009.

Just like the overall metropolitan area, the Aylmer sector did not register a significant change in its vacancy rate compared to October 2008. It should be noted that Aylmer was the sector with the highest proportion of unoccupied apartments in the Gatineau area. In fact, 5 per cent of the apartments there did not have occupants this past fall, compared to 5.2 per cent a year earlier. In the other sectors, the vacancy rates all varied within a narrow range from 1.6 per cent to 2.6 per cent. The difference between these rates and the rate in Aylmer was likely due, firstto the higher rents in this sector and, second, to the steady homeownership trend there. In fact, Aylmer registered the largest volume of homeowner housing starts in the area. A number of renters who already lived in this sector certainly contributed to the surge in property sales there and to the fact that Aylmer once again had the highest proportion of vacant rental units in the metropolitan area.

In Hull, which has more than half of all the rental housing units in the Gatineau area, the vacancy rate remained unchanged, at 1.6 per cent, in October 2009. The popularity of this sector is attributable to its proximity to Canada’s capital and to the presence of institutions of higher learning. Despite the job losses observed among young people since the fall of 2008, which may have caused some not to renew their leases in July, the increase in student enrolment at the Cégep de l’Outaouais and the Université du Québec en Outaouais seems to have helped landlords rent out their available units. In fact, enrolment at these two institutions rose again this past fall. The gain was 3.3 per cent at the Université du Québec en Outaouais while, at the Cégep de l’Outaouais, enrolment reached a record level, mainly thanks to the recent addition of new health programs.

In the Gatineau sector, the proportion of vacant apartments reached 2.6 per cent in October 2009, up from 1.7 per cent in October 2008. Market conditions also eased in the outlying area, where the percentage of unoccupied units rose from 1.3 per cent in the fall of 2008 to 2.3 per cent this past fall. The arrival of many apartments in these sectors during the last year increased the supply of units. In fact, 87 rental dwellings were added in the outlying area between July 2008 and June 2009, compared to 16 the year before. The continued homeownership trend also caused some rental housing units to be vacated, a number of which were still unoccupied in October 2009.