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Vacancy rate for apartments inching up

Crunch still in $600-$795 rentals

By: Murray McNeill

Thursday, Feb. 21, 2013 at 8:08 AM | Comments: 0

MIKE DEAL / WINNIPEG FREE PRESS Enlarge Image

Mike Deal / Winnipeg Free Press The H2O apartments under construction on Waterfront Drive. The vacancy rate for this year is expected to be 1.9 per cent.

WINNIPEG'S overall apartment vacancy rate will climb above two per cent next year for the first time in more than a decade, according to the latest market forecast from Canada Mortgage and Housing Corp.

The national housing agency's senior market analyst for Winnipeg told about 200 industry representatives attending a CMHC housing outlook conference Wednesday in Winnipeg the city's overall vacancy rate is expected to rise to just under two per cent this year -- 1.9 per cent.

And next year, it's expected to claw its way above that threshold to 2.1 per cent, Dianne Himbeault added.

That would be the highest it's been since 2000, when it sat at an even two per cent.

It would also be nearly half a percentage point higher than it was at the end of 2012, when it was 1.7 per cent, and a full percentage point higher than it was at the end of 2011.

While that's good news for apartment-seekers, Himbeault noted two per cent is still a fairly low vacancy rate for Winnipeg.

She said in an interview that while it's difficult to say what would be considered a healthy vacancy rate for Winnipeg, "it would be higher than that."

She also noted while Winnipeg's overall rate is rising, the vacancy rate in some of the most popular rental-rate ranges -- $600 to $695 and $700 to $795 -- was still 0.9 per cent and 1.3 per cent respectively in 2012.

And since most of the new rental units tend to be higher-priced, it will still be slim pickings in those lower rental-rate ranges, she added.

Himbeault told the conference the overall rate is improving because more new rental units are being built, and population growth is moderating.

Winnipeg has seen more than 800 new rental starts in each of the last four years, including 844 in 2012. And net migration to the city declined last year by five per cent to about 10,000 people.

Despite the moderation in growth, Himbeault said Winnipeg continues to gain more new residents than it loses, which bodes well for the local housing market.

She and Lai Sing Louie, CMHC's regional market economist, said the Winnipeg and Manitoba housing markets are expected to be among the better-performing markets this year.

Himbeault said CMHC expects housing starts in Winnipeg to grow by 4.6 per cent this year.

Sales of existing homes are expected to be about the same as last year, and the average selling price through the local Multiple Listing Service (MLS) is expected to climb by 3.8 per cent to $266,000.

Louie said Manitoba's average MLS selling price is expected to climb at the fastest pace in the country this year (3.9 per cent).

Housing starts are expected to be two per cent lower than last year, when single-family starts hit a 25-year high, he said, while MLS sales should be slightly higher at 14,100 units.

"Basically, housing markets are going to remain pretty much where they are," he added.

Mathieu Laberge, CMHC's deputy chief economist, told the conference interest rates are expected to remain at historically low levels this year, then begin inching higher in 2014.

murray.mcneill@freepress.mb.ca

BY THE NUMBERS

HERE is a review of Canada Mortgage and Housing Corp.'s latest market forecast

for Winnipeg and Manitoba, with percentage change in brackets:

WINNIPEG

Housing201220132014

starts4,0654,250 (4.6)4,250 (0.0)

MLS* 201220132014

sales12,09412,100 (0.0)12,200 (0.8)

MLS average201220132014

price$255,059$266,000 (4.3)$277,000 (4.1)

MANITOBA

Housing201220132014

starts7,2427,100 (-2.0)7,100 (0.0)

MLS sales201220132014

sales14,00814,100 (0.7)14,200 (0.7)

MLS average201220132014

price$246,318$255,900 (3.9)$263,600 (3.0)

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