Vacancy Rates Surge In Canada Amid Fallout of Covid-19 Pandemic
(Bloomberg) -- Vacancy rates jumped across Canada in 2020 as the Covid-19 pandemic brought disproportionate job losses to those most likely to rent their homes while also spurring a migration of people to smaller communities from the country’s major metros.
The average vacancy rate for rental units across the country climbed to 3.2% from 2% last year, Canada Mortgage and Housing Corp. reported Thursday. Toronto, the nation’s largest city and financial capital, had the highest vacancy rate in 14 years at 3.4%.
The Covid-19 pandemic has prompted an exodus from some of North America’s most expensive cities as professionals newly liberated to work remotely move further afield in search of more affordable accommodation. At the same time, people in the service industry and other face-to-face jobs have had to contend with higher unemployment from persistent lock down measures.
“The economic impact of the pandemic has significantly reduced rental demand,” Bob Dugan, CMHC’s chief economist, said in the release. “Lower international migration, fewer student renters and weaker employment conditions led to weaker inflows of new renters. While vacancy rates increased in many centres, we continue to see a need for more rental supply to ensure access to affordable housing.”
Rental markets in cities such as New York and San Francisco have loosened up, but perhaps nowhere have the changes brought greater relief than in Canada’s major metros of Vancouver, Toronto and Montreal, which have long faced even tighter vacancy rates than most of their U.S. counterparts.
In fact, in spite of the higher vacancy rates, the CMHC survey showed rents increased in Canada’s largest cities last year compared with 2019. Average monthly rent for a two-bedroom apartment rose 3.6% nationwide to C$1,165 ($910). Rents in Toronto climbed 4.5%, the agency said.
Other data has suggested the opposite, however, with low vacancy rates already starting to hand tenants more bargaining power. A report last week from Urbanation found average rents for units in apartment buildings in Toronto were down 8% at the end of December from a year earlier, while a report yesterday from the Toronto Regional Real Estate Board showed average rent for a two-bedroom condo unit fell 15%.
The Canadian government’s efforts to help renters by providing cheap loans for the construction of new apartments has prompted a surge of new projects that could further check rent prices. However, increased immigration targets to make up for the virtual halt on new arrivals last year may also wind up putting upward pressure on rents again before long.
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