Ottawa's apartment vacancy rate falls in 2022, report says

A for rent sign is displayed on a house in a new housing development in Ottawa on Friday, Oct. 14, 2022. THE CANADIAN PRESS/Sean Kilpatrick

A surge in demand, including the return of students to university and college campuses, tightened Ottawa's rental market in 2022 and returned vacancy rates to pre-pandemic levels, a new report says.

The latest rental market report by Canada Mortgage and Housing Corporation shows Ottawa's vacancy rate fell to 2.1 per cent in 2022, from 3.4 per cent in 2021. 

"Strong demographic and economic conditions supported rental demand and as a result, the vacancy rate dropped," CMHC said in its report. "The greatest declines occurred in central neighbourhoods, partly because of the return of post-secondary students."

CMHC says the vacancy rate drop was most apparent in central neighbourhoods near university campuses. The vacancy rate in the Sandy Hill/Lowertown area dropped to 2.1 per cent last year from 5.3 per cent in 2021, while the vacancy rates were 1.3 per cent in the downtown area and 0.7 per cent in the Glebe/Old Ottawa South area.

Other factors also supported demand for rental units, according to CMHC, including employment rates among youth aged 15 to 24 increasing, more people moving to the city permanently and rising prices and mortgage rates slowing the transition to homeownership for some renter households.

The report also notes a higher number of residents aged 25 to 44 were renting a place to live in 2022 – with 46 per cent of households in that age group renting instead of owning.

CMHC says while a considerable number of units were added to the rental stock, it's not enough to meet the demand.

"In addition, commercial buildings are being converted into rental housing projects, particularly in the downtown area," CMHC said.

"The significant drop in the vacancy rate shows that these additions were not enough to meet growing demand."

CMHC says the vacancy rates for apartments below $1,200 a month range between 1.2 and 1.5 per cent, while the vacancy rate for apartments over $1,350 is 2.6 per cent.

Rents increase in 2022

The cost to rent a two-bedroom apartment for new tenants in Ottawa increased 17 per cent last year.

CMHC says the average rent for a two-bedroom apartment that did turn over to a new tenant was $1,831. The average rent for a two bedroom apartment for the same tenant was $1,520.

The report shows the same-sample average rent for a two-bedroom apartment in Ottawa rose 4.8 per cent, with an average rent of $1,625.

Gatineau's vacancy rate below one per cent

Gatineau's vacancy rate is sitting at 0.8 per cent, as an increase in supply was offset by a higher demand for rental units.

CMHC says interprovincial migration increased in Gatineau last year.

The average rent for a two-bedroom apartments rose by 9.1 per cent last year.

Kingston vacancy rate

The city of Kingston has one of the lowest vacancy rates in Ontario, at 1.2 per cent.

"The vacancy rate stabilized because rental demand kept pace with supply growth in 2022," CMHC said.