CMHC expects renters to benefit from soft economic conditions
Rental vacancy rates in Calgary will rise to seven per cent by this fall, up from 5.3 per cent during the same time last year, according to Canada Mortgage and Housing Corp. (CMHC).
In its semi-annual housing market outlook released today, CMHC said two-bedroom rents are forecast to average $1,270 in October 2016, compared to $1,332 in October 2015.
“A rise in the purpose-built rental vacancy rate along will additional options in the secondary rental market will put downward pressure on rents this year,” said the report. “Although incentives will continue to be offered, some landlords will also lower rents to attract tenants.”
By the fall of 2017, CMHC expects the vacancy rate in the city to decline back to 5.5 per cent. The two-bedroom rent, meanwhile, is forecast to average $1,260.
The national housing agency said rental demand will moderate this year as migration to the region has slowed down due to fewer employment opportunities and rising unemployment rates. Completion of rental units in the purpose-built and secondary rental markets will also increase supply, contributing to higher vacancy rates.
“While economic conditions and rental demand are expected to improve in 2017, the vacancy rate will remain elevated,” said the report. “Landlords will continue to offer incentives and rent reductions to help fill vacant units, but to a lesser degree in 2017 compared to a year earlier.”
Competition from the secondary rental market, such as investor-owned condominium apartments, along with newly completed purpose-built rental units, will also provide tenants with additional rental options.
In 2015, the purpose-built apartment rental market universe rose for the second consecutive year reaching 35,227 units. With 1,206 apartment market rental units started in 2015 there were 1,943 units under construction in March 2016.
CMHC expects the purpose-built apartment rental market to expand for the third consecutive year in 2016. Furthermore, the secondary rental market will continue to provide tenants with additional rental accommodations.
Excluding social units, there were 6,196 apartment condominiums under construction in March. CMHC anticipates some of these units will likely become investor owned and part of the secondary rental market once completed.
As recorded in CMHC’s October Rental Market Survey from the last couple of years, more than 30 per cent of Calgary’s apartment condominium units were identified as investor owned and rented.