Ottawa’s rent growth accelerates in 2024 amid rise in pricier new inventory: CMHC

Ottawa’s rental vacancy rate has risen to its highest level in three years as the city’s supply of new apartments jumped nearly 10 per cent from 2023, the Canada Mortgage and Housing Corp. says. The federal housing agency says the vacancy rate for purpose-built rental apartments in Ottawa sat at 2.6 per cent in October when CMHC conducted its annual survey, up from 2.1 per cent last year and the highest since the rate was 3.1 per cent in 2021. Nearly 5,900 new apartments were added to Ottawa’s purpose-built rental supply between October 2023 and October 2024, CMHC said.  At the same time, though, the average rent for a two-bedroom purpose-built apartment, which CMHC uses as its representative sample, grew 10.7 per cent to $1,880. That compares with a four per cent year-over-year increase in 2023. The agency says the accelerating pace of average rent growth was “primarily driven by higher rent increases for new tenants at turnover and in newly completed units entering the market.” The downtown rental market tightened up over the past year as the vacancy rate dropped to 2.1 per cent from 2.9 per cent in 2023. Average two-bedroom rents rose 3.6 per cent to $1,940. Meanwhile, neighbourhoods just west of the core – Chinatown, Hintonburg and Westboro – saw a spike in vacancies amid a wave of new construction. The vacancy rate in those regions was four per cent in October, a big jump from 1.2 per cent the year before. Still, rents continued to rise as new inventory commanded higher rates. The average two-bedroom rent in neighbourhoods west of downtown was $2,175 in October, up from $2,062 in the same period in 2023. Another popular neighbourhood for rentals, Sandy Hill/Lowertown, saw its vacancy rate rise slightly to 1.9 per cent from 1.8 per cent. Average rents continued to rise to $2,071 for a two-bedroom unit, up from $1,895 the previous year. Vacancy rates also ticked up in areas east of downtown such as Vanier, New Edinburgh and Overbrook, but rents were also up in those neighbourhoods as new supply continued to come on the market. Across the river, Gatineau’s rental vacancy rate nearly doubled in the past year, rising to 1.9 per cent from 1.1 per cent in 2023. A total of 1,743 rental units were added to the city’s inventory, up from 804 the previous year. Average rent for a two-bedroom apartment in Gatineau rose 8.1 per cent last year to $1,353. Across Canada, the pace of rent growth cooled significantly this year amid the country's largest gain of purpose-built rental supply in more than three decades, CMHC said. The agency says the vacancy rate for purpose-built rental apartments sat at 2.2 per cent in October when the CMHC conducted the annual survey, up from the record low of 1.5 per cent last year. The average rent for a two-bedroom purpose-built apartment grew 5.4 per cent to $1,447, compared with an eight per cent increase in 2023. The figures represent actual amounts tenants pay for their units, meaning average prices often appear lower than those listed in other reports which measure average asking rents set by landlords. For instance, the average asking rent for two-bedroom purpose-built apartments last month was $2,294, according to separate research from Rentals.ca and Urbanation. The CMHC said rents increased by 23.5 per cent when units turned over, which was close to 2023 rates. Rent hikes on turnover units accounted for more than 40 per cent of the overall rent increase in 2024. It said Canada’s supply of purpose-built rental apartments grew 4.1 per cent year-over-year, the highest increase in more than 30 years. “Affordability for Canadian renters remains a challenge, particularly for new tenants who faced significant rent hikes as units turned over, limiting mobility for existing tenants and making it harder for prospective tenants to enter the market," said CMHC deputy chief economist Tania Bourassa-Ochoa in a statement. “However, record growth in rental supply helped slow down average rent growth and raise vacancy rates closer to the historic average, underscoring the critical role of added supply in improving housing affordability.” Meanwhile, the average rent for a two-bedroom condo was $2,199, with the vacancy rate for such units remaining unchanged at 0.9 per cent annually. Despite the slowdown in rent growth, the housing agency said affordability remained "strained." It noted the increase in rental stock was driven by higher-priced units being completed, many of which were too expensive for the average renter. The report said Toronto had the lowest rent growth among major regions at 2.7 per cent, down from 8.8 per cent in 2023, which it attributed to rising vacancy rates and having the lowest turnover rate. As rental supply grew, it appeared Toronto landlords took a "more cautious approach" to rent increases, according to the CMHC's analysis. It also noted rental apartment completions in Montreal remained among the highest on record, pushing vacancy rates higher, while in Vancouver, rental supply grew at a slower pace than the previous two years but still above historical rates. In both markets, persistently high demand meant rent growth didn’t slow as much as it did in Toronto. Calgary's rent growth slowed "significantly" in 2024 but still outpaced all other large urban centres due to strong demand, driven by population growth and stable economic conditions. Halifax also saw strong rental supply growth but slower population growth, leading to a higher vacancy rate and the biggest drop in average rent growth among major markets. Like Ottawa, Edmonton saw rent growth slightly accelerate this year, primarily driven by higher rent increases for new tenants at turnover and in newly completed units entering the market. – With additional reporting from the Canadian Press