P.E.I. apartment vacancy rate jumped in 2020, but so did average rent
‘P.E.I. is still in the midst of a rental apartment crisis’
P.E.I. apartment hunters saw some relief in 2020, if they were willing and able to pay the higher rents.
Figures released by Canada Mortgage and Housing Corporation Thursday morning showed the vacancy rate on the Island rose from 1.2 per cent in October 2019 to 2.6 per cent in October 2020. CMHC market analyst Chris Janes cautioned that some of that increase was due to temporary conditions.
"We've seen the same thing happen in every major market in Canada, simply the economic impact in particular of COVID-19 has significantly reduced rental demand in most provinces and cities," said Janes.
There are fewer students taking up apartments, because given virtual teaching, many of them have chosen to stay with their parents rather than travel to the province where their school is and pay rent. Lower international migration numbers have also reduced demand.
And in the greater Charlottetown area in particular, which makes up about 85 per cent of the Island's apartment market, the return of vacation rentals to the long-term rental supply is also having an impact.
"We think a tremendous amount, if not all, short-term rentals have returned to the long-term rental market because of the pandemic," said Janes.
Public health restrictions caused tourism to crash, prompting the exodus from vacation rentals. When tourists return, and with Charlottetown's plans to regulate the short-term rental market on hold, those apartments are at risk of leaving the market again.
"We're kicking the can down the road," said Janes.
"I think P.E.I. is still in the midst of a rental apartment crisis, particularly in terms of affordable housing, but is coming out of it."
Rents up more than 3%
Rents continued to rise at a rate well above the maximum allowed by the Island Regulatory and Appeals Commission.
The CMHC report contains two measures of how rents are increasing.
One looks at the average rent for all apartments.
It found the average rent for an apartment on P.E.I. was $916, a 3.8 per cent increase.
CMHC also calculates the average rent increase for apartments that were on the market in both 2019 and 2020, that is, excluding new apartments. It found a 3.4 per cent increase for those apartments.
IRAC set the allowable increase at 1.3 per cent. Landlords could apply for a higher increase in special circumstances, for example, if they invested in renovations.
The rents went up at a time when the consumer price index on P.E.I. was actually falling. Despite talk of creating affordable housing, overall prices for new units on the market were higher than prices for older units.
"We're still not seeing a reduction in the need for affordable housing," said Janes.
"We're still seeing pressure on the affordable side with the increase in rents."
But he added this is not unusual. When a city is coming out of a housing crunch it is affordable housing that is usually the last sector to see relief.
There are some positive trends, he said, with the provincial government's new affordable rental housing programs, fewer single detached homes being built, and more apartment buildings.
Overall the housing situation is moving in the right direction, he said, but perhaps not as rapidly as a quick look at the 2020 numbers suggest.