The London apartment vacancy rate continues to tighten, along with the rate in the rest of the province, hitting its lowest level since 2001.
A survey conducted in October by the Canada Mortgage and Housing Corp. (CMHC) pegged the vacancy rate for the London census area (which includes St. Thomas and Strathroy) at 1.8 per cent, down from 2.1 per cent last October.
The London area vacancy rate is still higher than the provincial average, which plunged to 1.6 per cent, the lowest level since 2000.
The average rent for all types of rental units in the London area was up almost four per cent, jumping to $952 from $918 last year.
The provincewide vacancy rate is dragged down by the big Toronto market, where the vacancy was only one per cent, down from 1.3 per cent a year ago.
But Kingston was even worse with a mere .7 per cent vacancy rate, plunging from 2.6 per cent a year ago.
In the London market, there was plenty of apartment and townhouse construction this year with starts on 1,597 units to the end of October, slightly ahead of last year when home construction hit near-record levels.
But CMHC analyst Amran Wali says it still isn’t enough. He said about 812 rental units were added to the market over the past year, only about a 1.6 per cent increase in the total supply.
“Builders have noticed that rental conditions in London have been tight, so we saw a lot of apartments started,” said Wali.
He said as more of the apartment construction projects now underway are completed, there may be a significant bump in supply.
Wali said strong job creation for youths aged 15 to 24, who are most likely to become renters, is helping to drive the trend in London and across the province. “Full-time youth employment increased last year, and they tend to leave their parents’ house and rent.”
Wali said demand is also being driven by students. The lowest vacancy rates are in northwest London where student housing is most prevalent. As well, he said, there was a 30 per increase in the number of international students granted study permits in the London area in the past year.
Jim Murphy, president of the Federation of Rental-Housing Providers of Ontario, warned the province could be headed for a critical shortage of rental housing.
He said the demand is being driven by population growth and a growing student market. But he said Ontario’s recently expanded rent control system and tax structures are discouraging development.
“We have a need for more supply and the provincial government needs to come to the table,” said Murphy.