Steady population growth and a stronger jobs market caused Ottawa’s residential rental vacancy rate to tighten over the past year, even as hundreds of new purpose-built apartment units came onto the market, Canada’s national housing agency said Monday.
The Canada Mortgage and Housing Corp. said the citywide vacancy rate stood at three per cent in October, down from 3.4 per cent a year earlier.
Vacancy rates were lowest for bachelor units as well as rentals in Chinatown, Hintonburg and Westboro.
One of the key drivers was the rise in full-time employment of residents between the ages of 15 and 24. This demographic is particularly important to the rental market, as young people are more likely to rent their first home once they land a stable job.
According to CMHC, youth employment grew by eight per cent over the last year.
At the same time, the agency said more and more residents between the ages of 25 and 44 are delaying their transition from renters to homeowners, which led to additional demand for rental units.
The CMHC said this was due to weakness in the job market for this demographic. While the spectre of government layoffs under the previous Conservative government reduced the confidence of many residents, public policy analysts have also argued that the rapid increase in real estate prices is making home ownership less accessible for some would-be first-time buyers.
New immigrants are also a key driver of the rental market, since many new residents arriving from abroad initially rent their homes.
CMHC, citing Statistics Canada, says international immigration levels to Ottawa-Gatineau through to June rose 62 per cent over the previous year, leading to an estimated 1,400 additional households moving to the area.
Despite the rising demand, the growth in rental rates actually slowed last year.
The average rent for a two-bedroom apartment increased 2.1 per cent this year, lower than the 3.1 per cent increase recorded last year.
Average rental rates in Ottawa range from $812 a month for a bachelor unit to $1,457 for a unit with three or more bedrooms, CMHC said.
Across the board, rents generally rose in line with the two-per-cent Ontario rent increase guideline. The provincial government sets an annual maximum rental increase for existing tenants in certain buildings, namely those constructed prior to 1991.
“Landlords, having increased rents at a stronger rate last year and facing greater competition from condominiums offered for rent, may have seen little reason to veer off from the rent increase guideline,” CMHC stated.
Over the last year, an additional 2,304 condominiums and 439 purpose-built apartments came onto the market.
There are signs that the gap between the two figures will shrink in the coming years as homebuilders move away from constructing new condos in favour of rental units.