Rental vacancy on the rise

Source: Winnipeg Free Press 
But increased supply hasn’t moderated average local rates which are higher than they’ve been in 25 yearsWinnipeg’s vacancy rate for rental apartments is higher than it’s been in 25 years, according to the most recent national market report from the Canada Mortgage and Housing Corporation, published Feb. 18.
In 2020, that rate was 3.8 per cent, but leaped to five per cent in 2021, according to analysis by the CMHC’s Heather Bowyer. Key drivers for that increase include lags in the labour market, population flows and overall economic conditions, which have contributed to weaker demand for rental units, the report notes.
However, a significant increase in rental supply has boosted the vacancy rate even further. Within the Winnipeg central metropolitan area, 2,915 units were added to what the CMHC refers to as the “purpose-built rental universe.” That’s the largest annual increase ever since data was first collected in 1990, with units under construction up 30 per cent, year over year, as of last October.

​But according to the report, that increase in supply has not led to an increase in affordability. Rather, the opposite. “While there is a need for more affordable units, new supply coming on to the market posts higher average rents,” the report notes. For those in the quintile with the lowest income — those earning less than $25,000 per year — an “affordable” rent would be less than $625 per month.
That tranche represents roughly 20 per cent of all renters in the metropolitan area, but due to high average rental costs, those renters only have affordable access to less than three per cent of all units; the lowest quintile is also the segment of renters with the lowest vacancy rate, showing they have the highest demand for quality, affordable units. It’s a demand that is largely going unsatisfied.
Meanwhile, the average rent for all property types in Winnipeg increased by 2.5 per cent year over year, according to the most January rental report from rentals.ca. Compared to January 2020, the cost of a one-bedroom apartment in Winnipeg has increased by just over four per cent, to $1,162 per month.
Paul Danison, the content director of rentals.ca, said the situation in Winnipeg stands out from the situations in rental markets in B.C. or in Ontario. While Winnipeg has supply and not necessarily high demand for the units available, in large part due to higher costs, other markets are experiencing low supply with high demand.
Danison said part of the reason for the higher vacancy rate is the overwhelming amount of new supply that’s become available here, but also contributing were local home-buying conditions; although the average cost to buy a home is rising, it is still comparatively more affordable than most major Canadian jurisdictions. With immigration slowed — but rising as compared to 2020 — owing to the pandemic, and many would-be high-scale renters looking instead to purchase or to live in larger spaces, that spells less immediate demand for the vacant rental units.
Nationally, the average rent for a two-bedroom home across the 37 districts the CMHC surveyed rose annually by three per cent, to $1,167, in 2021; that’s eight per cent higher than the same figure in 2019.
CMHC chief economist Bob Dugan told The Canadian Press last week that the rise in rent can be attributed to an overall imbalance of supply and demand and disparity of economic recovery across the surveyed districts.
While in Winnipeg the lowest quintile of renters could only have affordable access to three per cent of the rental universe, in Toronto and Vancouver, the lowest-earning renters could only reasonably afford 0.2 per cent of all available units.
That is clearly worse than Winnipeg’s situation, but the CMHC data paints a picture of a rental universe that is becoming less and less viable for low-income earners who form a huge portion of the city’s would-be renters.
Among units in the purpose-built market completed between July 2018 and June 2021, the report notes, the average rent was $1,541. That’s 33 per cent higher than the average rent for all units in the city.