Increase in Ottawa rental housing supply not enough to offset demand: CMHC

The city of Ottawa saw a significant increase in rental supply last year, but demand grew at the same pace and contributed to a continued rise in rents.

• Sign up now for our nightly CTV News Ottawa newsletter
• The information you need to know, sent directly to you: Download the CTV News App

A new report by the Canada Mortgage and Housing Corporation (CMHC) found the vacancy rate for the purpose-built rental market in the city held steady at 2.1 per cent in 2023, the same rate as in 2022 and down from 3.5 per cent in 2021.

The average rent for a two bedroom purpose-built rental in Ottawa was $1,698, while a two bedroom condo cost an average of $2,085 over the entire year, according to the CMHC.

The report separates the cost of purpose-built rentals and condo rents. A report from rentals.ca last year found the average cost to rent a two bedroom in Ottawa with both variables included was $2,542 in November 2023.

The CMHC report found a 4 per cent increase in rent for purpose built-rentals in 2023 when compared to the year before, but at a slower rate of increase (4.8 per cent). The vacancy rate for condominiums remained low at 0.4 per cent, with the average two bedroom condo costing an average of $2,085 a month.

The condo vacancy rate has remained below 1 per cent since 2019.

"Although this rate is close to the historical average, the difference is that it was accompanied by a larger increase in rents. Together, these factors make it difficult for tenants to find housing," the CMHC said in the report.

The neighbourhoods with the lowest rents in the city also had the lowest vacancy rates, concentrated mostly in Ottawa's east-end.

Gloucester, Orleans and the former municipalities of Cumberland and Clarence-Rockland saw the largest annual decrease, falling from 4 per cent in 2022 to 1.1 per cent in 2023. The rental vacancy rate in the outskirts of former City of Ottawa remained low at 2.2 per cent.

The vacancy rate in Nepean, Kanata and North Grenville eased slightly, from 1.2 per cent in 2022 to 2 per cent in 2023.

More than 3,500 new rental units were completed in 2023, a record high compared to previous years.

The report says record migration to Ontario in 2023 has added pressure to the rental market. International migration in the province has risen significantly since 2021. Ontario saw 80,193 new arrivals in 2021 and 498,944 in 2023.

Statistics find the vacancy rate in 2023 is close to the average rent in the city for the last two decades, with the average monthly rent in Ottawa remaining around 2.3 per cent since 1999.

There remains a wide gap in rents for purpose-built homes with a high turnover rate, compared to the average rate for non-turnover units.

More specifically, the average rent for a two bedroom apartment in 2023 was $1,903 for units that turned over to a new tenant and $1,643 for units that did not.

"For the past two years, available units have been increasingly scarce, as before the pandemic. The $260 rent gap between apartments with and without tenant turnover reflects this rental market tightening," the report said.

The vacancy rate for Gatineau eased slightly from the year before at 1.1 per cent, compared to 0.8 per cent the year before. The average rent for a two bedroom purpose-built unit was $1,252, up by 8.9 per cent from 2022 and $1,708 for a two bedroom condo.