Leader Post, Nov 01, 2015- Vacancy rates have increased in Regina from 3.0 per cent in October 2014 to 5.3 per cent in October 2015, according to preliminary data from Canada Mortgage and Housing Corp. (CMHC) released Monday.
Saskatoon saw vacancy rates jump from 3.4 per cent to 6.5 per cent during the same period, while Saskatchewan vacancy rates have increase from 4.1 per cent to 6.8 per cent, thanks largely to the slump in the oilpatch.
Goodson Mwale, senior market analyst for CMHC in Saskatchewan, said the economic slowdown due to low oil prices is mainly responsible for the rising vacancy rate in the province.
“Definitely, the oilpatch (has had an impact),’’ Mwale said. “There’s an issue of softening of rental demand due to the economic environment and what’s happening specifically with lower oil prices has impacted those areas (like Estevan, Weyburn, Swift Current and Lloydminster).’’
In the two major cities, vacancy rates are rising due to slower economic, population and employment growth, Mwale said. “In Regina and Saskatoon, we’ve got relatively weaker labour market conditions compared with other parts of the Canada, which is impacting net migration.’’
Mwale said new immigrants tend to live in rental housing in their first few years in the country, but the number of immigrants coming to Regina and Saskatoon has been falling since 2012. Employment growth has also fallen off during the last three years.
“Demand is one side of the coin; the other side is supply,’’ Mwale said. “We’ve seen quite a bit of rental (housing) starts in Regina in the last couple of years. In 2014, we had 803 apartment rental (housing) starts. So far, in the first nine months of 2015, we’ve had 561.’’
By comparison, in Saskatoon, 340 new apartment units were started in 2014, and 143 during the first nine months of 2015.
From July 2014 to June 2015, the number of rental units completed was 703 in Regina; in Saskatoon, 189 rental units were completed. As a result, the number of new rental suites, primarily apartment-type condos, is exceeding supply in Regina. “There’s quite a bit of product out there. There was a jump (in the vacancy rate) to 3.0 per cent last year. Since then, there’s been more starts, despite the elevated inventory.’’
Accordingly, the condo apartment vacancy rate in Regina jumped from 1.2 per cent in October 2014 to 4.6 per cent last month, while in Saskatoon, the vacancy rate for condo apartments increased only slightly from 1.2 per cent to 1.5 per cent during the same period. Rents for an average two-bedroom apartment have stayed relatively flat at $1,055 per month in Saskatchewan, $1,095 in Regina and $1,087 in Saskatoon, the report said.
Canada’s 35 larger centres also saw the average vacancy rate in rental apartments increase to 3.3 per cent in October 2015, from 2.8 per cent in October 2014, CMHC said.
“The rise in the national vacancy rate was due to lower net migration in regions most affected by low oil prices as well as an increase in the supply of purpose-built rental apartment units,” said Bob Dugan, chief economist at CMHC.
Overall, the average rent for two-bedroom apartments in existing structures increased 2.4 per cent between October 2014 and October 2015. In October 2015, the average rent for a two-bedroom apartment in new and existing structures was $960.
Condominium vacancy rates tend to be lower than vacancy rates for purpose-built rental apartment units in most centres, while all centres registered higher average rents for rental condominium apartments. Condominiums are typically newer and tend to offer a greater range of amenities than purpose-built rental apartments, CMHC said.