Apartment rents in Calgary jumped almost six per cent during the past year despite weakening demand led by the slumping energy sector.
Canada Mortgage and Housing Corporation, in its spring market survey, said same sample rents for a two-bedroom apartment rose 5.9 per cent in the 12 months to April 2015. The average monthly rent for a two-bedroom apartment grew to $1,319, eclipsed only by Vancouver — at $1,345 — among the major markets surveyed by CMHC. The average two-bedroom rent in Toronto was $1,269, it said.
Meanwhile, the Calgary-area vacancy rate grew to 3.2 per cent in April, more than double the 1.4 per cent rate of a year earlier.
Gerry Baxter, executive director of the Calgary Residential Rental Association whose members operate about 53,000 apartment units in the city, said rents have been stable in recent months, noting CMHC’s fall report put the average Calgary rent at $1,322.
“The increase in rents (year-over-year) actually took place between the spring and the fall of last year while the market was still fairly hot and vacancies were still very low,” said Baxter. “It was in the fall of last year that we started to worry about the marketplace, the economy.”
The CMHC report confirmed rent increases were largely attributed to stronger demand in the latter half of 2014.
Baxter said the rising vacancy rate in Calgary is a direct reflection of what’s happened in the local economy in recent months.
“The Alberta economy has slowed right down and a lot of the slowdown has led to unfortunate layoffs, particularly within the oil and gas industry. Many of those people we know came out here for employment from other provinces and if they’re laid off most of them go back,” he said. “The economy slows in Alberta, we haven’t got the jobs, people stop coming.”
New apartment construction has also created more supply in the local market, said Baxter.
Calgary-based Boardwalk Real Estate Investment Trust has 5,310 rental units in the Calgary area and 12,396 in the Edmonton area. Chairman and CEO Sam Kolias said spring rents reflect the lower vacancy rates of 2014.
The current rate of 3.2 per cent has historically reflected a supply and demand balance, said Kolias.
“And when that happens, pricing pressures begin to ease as well,” he said. “At three per cent (vacancy), they typically stay the same or they rise very, very slowly. Rental increases are muted, if any at all.”
Kolias said new condo construction in the past one to two years has decreased rental demand as more renters are buying homes.
Councillor Druh Farrell said rising rents have intensified what she called Calgary’s “affordable rental crisis.”
“Even though we’ve seen a slight easing of the rental market with the economic slowdown, the lack of affordable housing continues to impact many sectors, from homelessness, to students, to the service industry,” said Farrell.
Darren Nimegeers, a spokesman for the Calgary Housing Company, the city-owned corporation that manages 7,200 units of affordable housing and about 2,500 subsidized units operated by private landlords, said the organization had a waiting list of 3,497 people in May, up from 3,225 a year earlier.
Sheryl Barlage, executive director of the RESOLVE campaign to find affordable housing for the city’s homeless, said high rents have more people looking for affordable options.
“It’s been something identified as a need for a very long time,” she said.
In Edmonton, the CMHC said same sample rents rose 4.4 per cent to $1,250, from $1,180. Its vacancy rate rose to 2.4 per cent from 1.4 per cent last year.
The overall vacancy rate for Alberta’s urban centres was 3.4 per cent in April, up from 1.8 per cent a year ago. Average rents rose 4.8 per cent.
“A combination of weaker economic conditions, slower migration to the province, and an increase in the supply of rental units has placed upward pressure on vacancy rates in Alberta” Lai Sing Louie, CMHC regional economist, said in a statement.
Canmore posted Alberta’s lowest vacancy rate, at zero per cent. Cold Lake and Wood Buffalo had the province’s highest vacancy rates at 22.8 and 22.3 per cent respectively.
Wood Buffalo rents were the highest in the province, at $1,984 — down from $2,061 in 2014.Tags: alberta, apartments, calgary, demand, rental, supply, vacancies