According to a recent report from the CBRE, demand for multi-family housing is stronger than ever in Canada and, as such, developers are shifting their focus to purpose-built rental housing. The CBRE says multi-family starts rose 52.2 per cent over the five-year average in 2014 as a result of low vacancy rates and a lack of affordable home ownership opportunities.
Across Canada, average vacancy rates remained low over the past decade, ranging between 2.1 per cent and 3.2 per cent. According to the report, such low rates lend “strength to the theory that constant immigration and population growth are providing multi-family rental owners with a steady source of demand, regardless of economic conditions.” However, a consistently low average rate also reflects a shortage of purpose-built rental apartments across the country, thereby leaving few options for renters.
In Canada’s largest real estate markets, Toronto, Calgary, Montreal, Ottawa, Vancouver and Edmonton, purpose-built rental starts increased by a total average of 28.7 per cent, year-over-year, in 2014. Calgary posted the strongest gains, with units increasing 174.1 per cent on an annual basis. The only region to record a decline in purpose-built construction starts was Edmonton, where started units fell by 25.9 per cent. Purpose-built construction was also well above the five-year average for most regions and, in Vancouver, Calgary and Ottawa, figures nearly doubled their respective five-year averages.
In 2014, the average price of a home in Canada reached a record-breaking high of $401,000 and, over the last decade, prices have increased by 72.1 per cent. These statistics, the CBRE says, will have the largest impact on the future of the purpose-built rental market in Canada.
“With a continued rise in home prices, affordability for many remains a key concern, even with lower interest rates,” the report states. “It is the inability of many Canadians to purchase that is keeping the demand for rental real estate as strong as it is.”
Despite being significantly smaller than Toronto, Montreal remains Canada’s largest apartment market. At the end of 2014, Montreal had 534,000 rental units, a difference of 73.3 per cent over Toronto numbers.