Waterloo Region renters faced higher costs, few vacancies in 2019

WATERLOO REGION — A new report from the Canada Mortgage and Housing Corporation underscores tightening rental market conditions in Waterloo Region over the past year, highlighted by higher rent, fewer vacancies, and a shrinking turnover rate.

Between October 2018 and October 2019, average rent increased by 2.2 per cent to $1,163, while the overall vacancy rate in the Kitchener-Waterloo-Cambridge census area fell from 2.9 per cent to 2.1 per cent, according to the CMHC.

And while the average rent increase in this region was close to the provincial guideline of 1.8 per cent for 2019, a sample of buildings common to both 2018 and 2019 surveys saw average rent increase by five per cent.

The turnover rate also fell nearly five percentage points to 14.2 per cent, an indicator that fewer people moved over the past year.

“Moreover, the dampened number of available listings in the resale market likely caused some prospective firsttime homebuyers to stay in the rental market, contributing to the lower turnover rate,” the report stated.

Vacancy and rental rates in 2019 varied depending on the size of the unit, according to the CMHC (2018 rates in bold): á Bachelor: $810 and 3.2 per cent vacancy ($796 and 2.5 per cent vacancy); á One bedroom: $1,045 and 2.1 per cent vacancy ($1,021 and 2.9 per cent vacancy); á Two bedrooms: $1,231 and 2.1 per cent vacancy ($1,210 and 3.1 per cent vacancy); á Three or more bedrooms: $1,300 and 1.3 per cent vacancy ($1,254 and 1.7 per cent vacancy).

This latest report shows the cost of living continues to rise for renters in

Waterloo Region. Between 2012 to 2017, average rent increased by about 20 per cent in this region.

That’s well above the provincial guideline for rent increases, also known as rent control, which came in at about 11.5 per cent over that same five-year period.

The 0.8 per cent drop in the vacancy rate over the past year also nearly wiped out the gains made between 2017 to 2018, when the vacancy rate rose from 1.9 per cent to 2.9 per cent thanks in part to more than 1,600 new rental units built in 2018.

October 2019 was the first time in seven years the total stock of purpose-built rental units decreased relative to the previous year, partly due to the conversion of units into condos and student rentals.

Between 2018 and 2019, the number of purpose-built rental apartments in the region fell by 2.3 per cent, while the estimated stock of condo apartments rose by 16.4 per cent.

Rental condo apartments had a vacancy rate of just 0.6 per cent in October 2019, the lowest it has been in four years.

Population growth has also played a role in driving up the demand for rental units in this region over the past year, the CMHC found.

While the population of Waterloo Region historically grew at an average of 4,650 people annually from 2006 to 2014, recent annual increases have averaged around 12,505 people per year.

“This suggests that the market is responding to a shift of renter preferences toward rental condominium units, which was also supported by in-migration of young professionals,” according to the report.

“In addition, the fast population increase amid record prices, and the dampened number of active listings in the resale market putting pressure on the rental market, (is) contributing to the decline in vacancy rates,” the report found.

These tightening rental market conditions were a contributing factor in a nearly 5 per cent decrease in the region’s turnover rate over the past year. Turnover fell from 18.8 per cent to 14.2 per cent — the lowest it has been since the CHMC started tracking it in 2016.

The provincial average came in at about 13 per cent.

Even though high turnover rates are common in cities with a large post-secondary presence, the sharp decrease in this region’s turnover rate over the past year suggests renters “did not move as much because asking rents have become increasingly higher,” the CMHC found.

The Rental Market Survey is conducted every year in October in all urban areas with populations of 10,000 people or more. It includes private rental structures that have been on the market for at least three months with at least three rental units.

Student housing units are not counted in the survey since they often do not fulfil the CMHC’s characteristics of a self-contained rental unit (such as their own kitchen, bathroom, or other amenities).