Saskatoon’s apartment vacancies climb as economic conditions weaken
Watch above: After years of enjoying low rental vacancy rates in Saskatoon, landlords are stuck with empty properties. Meaghan Craig finds out what’s happening with the market and how long it’s expected to last.
SASKATOON – From barely anything to rent in Saskatoon in 2007 to now. Saskatoon’s apartment vacancy rate has exceeded levels not seen since 2006.
Good news for those renting in the Bridge City mixed with a bit of bad news.
“I’ve been looking and I have noticed with the rest of my friends who have places that they are renting that need roommates and everything like that, that there is larger array of different places available,” said one law student on University of Saskatchewan campus who has decided to finally take the plunge.
Experts say there are a few things influencing this change in vacancy rates including lower oil prices and other economic factors.
“What has supported steady rental demand in Saskatoon for the last several years has been strong employment growth and elevated levels of net migration,” said Goodson Mwale, senior market analyst with the Canada Mortgage and Housing Corporation (CMHC).
“Now we’re seeing those two key drivers of housing demand moderate actually this year and we expect them to moderate even moving forward for 2015 and 2016 so that will have a softening impact on rental demand.”
Supply is up and so is the rental market’s competition. Saskatoon has hit a 30-year high in condominium construction and others are taking advantage of historical low-interest rates by buying homes.
“We’re expecting in October of 2015 to actually see the vacancy rate to go up again to about 3.9 per cent and then edge up slightly to 4 per cent in October of 2016 as well.”
More vacancies however doesn’t mean lower rent.
Experts say they also expect to see a modest increase in rent going forward. An average two-bedroom apartment in Saskatoon rented for $1,091 last October, this October that same apartment will rent for $1,115 and $1,135 in 2016.
“You have to take into account as well when you have the new product coming, you have more of the newly built, purpose-built apartments coming into the rental supply they normally attract a slightly higher average rent and that will tend to put more pressure on the average monthly rents.”
The good news with vacancies rates rising this year and next, Mwale says landlords will have less incentive to substantially increase monthly rents.
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