Home ownership spike raises vacancy rates
More people making the leap into the home ownership market in 2009 hasincreased Ottawa's apartment vacancy rate, an annual report releasedWednesday by the Canada Mortgage and Housing Corporation stated.
More people making the leap into the home ownership market in 2009 has increased Ottawa's apartment vacancy rate, an annual report released Wednesday by the Canada Mortgage and Housing Corporation stated.
Ottawa's vacancy rate for private rental apartments increased to 1.5 per cent in Oct. 2009, up from 1.4 per cent the same time last year, a rental market report for the Ottawa area said.
“Low borrowing costs coupled with steady employment conditions in the capital city gave many renters the right incentives to jump into the homeownership market, pushing the vacancy upwards,” said Sandra Pérez Torres, CMHC housing market analyst for the Ottawa area.
Compounding the incentive from low borrowing costs, the average rent for a two-bedroom apartment increased by 2.9 per cent from last year's average, the report said.
But at the same time, minimal rental apartment construction and fewer secondary rental market units kept vacancies low, Pérez Torres said.
“While both influences roughly balanced each other out, the outflow of households from rental accommodations into homeownership was relatively stronger,” said Pérez Torres.
The trend in Ottawa was one seen across Ontario, where the vacancy rate for all apartment types — particularly for bachelor suites — rose from 2.7 per cent in 2008 to 3.5 per cent in Oct. 2009.
“Demand for rental accommodation weakened as low interest rates and a moderation in home prices enticed many first-time buyer households into the homeownership market,” said Ted Tsiakopoulos, CMHC's Ontario regional economist. “Softer employment conditions for young adults dampened renter household formation and rental demand further,” he said.
In addition to improved home ownership affordability and weaker youth labour markets, declining international migration also contributed to the growing vacancy rate.