From the CMHC press release regarding vacancy rates in St. John’s.
According to Canada Mortgage and Housing Corporation’s (CMHC) Fall Rental Market Survey, the vacancy rate in the St. John’s Census metropolitan area (CMA) was 1.3 per cent, compared to 1.1 per cent in 2010.
“With record employment and income growth attracting people to the region, population growth continued to create rental demand as new immigrants have a high tendency to rent,” said Chris Janes, senior market analyst with CMHC in Newfoundland and Labrador. “An increase in home prices and a solid economy also supported demand for rental units in 2011. These factors, coupled with limited new rental supply, continued to keep the local vacancy rate low,” added Janes.
Provincially, vacancy rates in percentage terms were 1.3 in the Corner Brook area, 1.2 per cent in Gander and 0.9 per cent in the Grand Falls-Windsor area. The combined provincial vacancy rate for all centres surveyed increased from 1.0 per cent to 1.3 per cent.
Overall, the average two bedroom rent was $701 across the five urban centres surveyed, with increases recorded in every centre. The highest average two bedroom rent recorded was $771 in the St. John’s CMA, while Bay Roberts posted the lowest average rent of $561. The remaining average two bedroom rents were $584 in Corner Brook; $567 in Gander and $646 in Grand Falls-Windsor.
Provincially the rental market for Newfoundland is showing lower vacancy rates. Currently we are sitting at 2% (down 1.2% from last year’s vacancy rate for 3.2%)
The St. John’s rental market posted a vacancy rate of 2.2 per cent versus 3.7 per cent last year. This translates into 80 vacant units out of the 3,668 units surveyed (according to CHMC). With the local labour market remaining healthy, positive net-migration will continue to create rental demand and keep vacancy rates low. As well, with higher housing prices (and expecting to continue to increase) many buyers are being pushed out of the housing market altogether. The demand for for rental is expected to remain strong. Great time to buy an investment property?
The vacancy rate within the St. John’s, Mount Pearl areas was lower in 2008 and average rents increased across the board. This marks the second consecutive decline in the vacancy rate and largely reflects the impact of brisk economic activity and strong employment levels. Growth in residential construction activity, combined with record MLS® sales and a tight supply of existing homes for sale, translated into substantial price growth, making the transition from renting to home ownership challenging for renter households.
The vacancy rate for St. John’s and area was a low vacancy rate of 0.8 per cent. This represents a decrease
of 1.8 percentage points from the 2.6 per cent vacancy rate recorded in 2007 and marks the second time since 2003 in which the vacancy rate decreased. At 0.8 per cent, the vacancy rate reached its lowest level since 1980.
Monthly rental rates increased slightly for St. John’s by 3.8%. The average two bedroom rent currently stands are $630 monthly.
Several factors will decrease the vacancy rate this year and in 2009 CMHC reports.
As home ownership costs rise, the movement of renter households to home ownership will continue to slow. However, out-migration of the 18 to 24 year-old segment of the population will persist and once again this will put upward pressure on the vacancy rate. In fact, close to 80 per cent of this age group tend to be renter households. Investment in rental housing will increase the supply only slightly this year and next.
Accordingly, the vacancy rate for structures containing three or more units is forecast at 1.0 per cent in 2008 and 1.5 per cent in 2009. With the vacancy rate decreasing, expect monthly rents to increase by 6.0 and 11 per cent this year and next, respectively, as landlords attempt to recover increased costs associated with maintaining the rental stock and lower vacancies and higher energy costs exert upward pressure on rents.
Over the previous three years, the St. John’s vacancy rate increased approximately three percentage points, or an average increase of 1.0 percentage point per year. Much of the increase was attributed to record home buying activity and the corresponding movement of renter households to home ownership.
However, this year’s sizeable decline in the vacancy rate is a clear indication that many renter households now deem it more affordable to remain renters rather than buy a home. The average prices in St. John’s have increased (approx $185,000 in January), pushing first time buyers to the sidelines. Although both the resale and new home markets are expected to remain strong next year, the impact of first-time buyers shifting out of rental will be less pronounced than in prior years. The combined effect of these factors should result in the vacancy rate holding steady at the current level of 2.6 per cent in 2008.
However, there is certainly upside risk to the economic forecast and a corresponding decline in the vacancy rate due to an increase in construction activity from Hebron, the Long Harbour Smelter, the Southern Head Placentia Bay refinery and Lower Churchill development.