The Canada Mortgage and Housing Corp. (CMHC) is highlighting two new rental housing indicators that are said to reveal a significant price gap between units occupied for different lengths of time – in addition to the share of affordable units in major cities.
Combined, they paint a picture of the rental market that “raises more concerns on housing affordability and supply,” said a CMHC report released June 22.
In Vancouver and Victoria, the share of rental units that can be categorized as affordable account for roughly one per cent of the market. These units are affordable for someone in the lowest 20 per cent of incomes in a census metropolitan area.
In comparison, the share of affordable units in Montreal accounts for 23 per cent of the market.
“What this first measure tells us is worrisome, to say the least.… The lowest income households have access to a very small share of the rental stock. Apart from Quebec City and Montreal, the market share that is affordable for low-income households is less than five per cent in major centres, one per cent in Vancouver and almost none in Ontario cities,” said the report, authored by Kevin Hughes, CMHC deputy chief economist.
The second indicator compares average rent for units occupied for more than a year with the average rent for units where occupants arrived in the last 12 months.
In Vancouver this price gap is roughly $478. This is the second-largest in the country after Toronto, which has a gap of $510. Montreal has a price gap of roughly $250.
“This result is not surprising as owners will adjust the rent in order to reflect current prices and to account for certain capital expenditures (repair and renovation) that could not be accounted for prior to the turnover,” stated the report.
The difference in pricing is usually more pronounced in cities with a tighter rental market, as this drives up average rent.
“The two new measures introduced by CMHC in its rental market survey improve our analysis of the rental market and increase our awareness of the lack of housing supply in Canada. They also tell us that to fill this gap, the short- and long-term prospects of all market participants will have to be considered. Ensuring that Canadian households have access to affordable housing while encouraging private sector investment is a challenge, but there are few alternatives,” said the report.
The two indicators build on CMHC’s rental housing survey and are new additions to the research.