CMHC Spring 2013 Rental Market Survey

MONTREAL, QUEBEC--(Marketwired - June 20, 2013) - According to the Spring Rental Market Survey conducted by Canada Mortgage and Housing Corporation (CMHC), the average vacancy rate for privately initiated buildings with three units or more stood at 3.1 per cent in April in urban centers (10,000 or more) of Québec. This is an increase of approximately one percentage point over the same period last year.

This result is largely due to easing in the census metropolitan area (CMA) of Montréal - whose rental stock is two-thirds of the provincial total - but also in other areas of the province. With the exception of the Trois-Rivières area, all CMAs showed a statistically significant increase in their vacancy rate. With respect to other urban areas, the survey reported a stable rate (3.1 per cent) in agglomerations of between 10,000 and 49,999 inhabitants and a rising rate (3.8 per cent) in agglomerations of between 50,000 and 99,999 inhabitants (see table).

Again this year, the picture of the market by apartment size remains fairly uniform across the province: the market is tighter in the case of larger apartments. Indeed, the vacancy rate is significantly lower for apartments of two and three-bedrooms (2.5 per cent and 2.9 per cent respectively) than for one-bedroom apartments (3.8 per cent). However, the gap between these segments varies depending on the region of the province.

The average rent stands at $691 for two-bedroom apartments. With regard to CMAs, the average rent is between $560 and $746. As for other urban areas, it lies in the lower part of this range. The picture of rents by dwelling size is congruent with the nature of the product and its relative availability. The survey often shows that the average rent jumps by about $100 with the addition of a bedroom.

"The easing of a large part of the province's rental markets primarily reflects lower demand. This is due, firstly, to the migration of young families outside Québec (as evidenced by the recent increase in net outflows) and also to home-ownership, as evidenced by the resale market statistics. On the supply side, it remains unchanged. Developers still prefer the condominium segment" explains Kevin Hughes, Regional Economist at CMHC for Quebec.

The combination of the same factors mentioned above resulted in an increase in the vacancy rate in the metropolitan area Montréal: it rose from 2.2 per cent in April 2012 to 3.0 per cent in April 2013. Making up about half of Montréal's rental stock, the two-bedroom market segment stands out by the fact that its vacancy rate remained unchanged (2.2 per cent) which is the lowest among the bedroom categories. For its part, the average rent for two-bedroom units was $719 in April 2013.

In the Québec CMA, the rental market also eased notably this spring. The vacancy rate went from 0.7 per cent last year to 2.2 per cent this year. This is the case for all market segments, particularly that of two-bedroom apartments. In addition to a decline in demand, we can add, in the case of Québec, an increase in supply, as evidenced by the data from the housing starts survey. The average rent for a two bedroom apartment was $763 / month this spring.

The Quebec portion of the CMA Ottawa-Gatineau is one of the areas where the rental market eased the most. According to the April survey, the vacancy rate has almost doubled (4.0 per cent compared to 2.1 per cent last spring). This result also reflects the situation by bedroom type. This easing of the rental market is also explained by a decline in demand. The average rent of CMA ($746) is still the highest in the province. This is explained, among other things by a relatively younger stock and its proximity to the Ottawa market.

Up one point compared to the spring of 2012, the vacancy rate stood at 4.6 per cent in the Sherbrooke area. This is the highest vacancy rate among CMAs (followed by Gatineau at 4.0 per cent). In Sherbrooke, the decline in rental demand is explained by a move toward ownership of semi-detached and row homes. On the supply side, an increase is observed. The average rent for a two bedroom went from $581 to $586 in April 2013.

Unlike other CMAs in the province, the overall market remained generally stable in the Trois-Rivières area (vacancy rate of 3.9 per cent). Again this year, the most spacious accommodations are those that showed the tightest conditions. Moreover, rates in some categories actually fell. In April 2013, the average rent rose to $562 for two-bedroom apartments. This is among the lowest among CMAs. It is likely that the market dynamics are different in this area: a rental demand which is still supported by relatively low rents and a stagnant supply.

Going from 0.7 per cent in spring of 2012 to 2.9 per cent this year, the vacancy rate in the Saguenay area recorded the highest increase in the vacancy rate. This alleviation is observable in all market segments and is due to stable demand and increased supply. As for the average rent, it amounted to $560 for two-bedroom apartments.

As Canada's national housing agency, CMHC draws on more than 65 years of experience to help Canadians access a variety of high quality, environmentally sustainable and affordable housing solutions. CMHC also provides reliable, impartial and up-to-date housing market reports, analysis and knowledge to support and assist consumers and the housing industry in making informed decisions.

For more information, visit www.cmhc.ca or call 1-800-668-2642. CMHC Market Analysis standard reports are also available free for download at www.cmhc.ca/housingmarketinformation.

This release is also available at www.cmhc.ca.

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