This week Canadian Mortgage and House Corporation (CMHC) released its latest Rental Market Report, and Halifax’s vacancy rate dropped from a record-setting low of 1.6% to a new record-setting low of 1%, with some parts of HRM seeing even lower numbers.
The vacancy rate represents the number of units available for rent at any given time. CMHC updates it annually in January and June.
Our November cover story, Halifax rental crunch, looked at why it’s so hard to find an affordable apartment in this city. Short-term rentals (STRs) and ghost hotels, entire apartment building filled with STRs, are a part of the issue, but not the only cause of our woes. Add to that record immigration, new buildings opening and driving up median rent, and aging Boomers who want to trade a 25-metre driveway for apartment living, and you start to see the picture.
“I felt sick to my stomach,” says Councillor Waye Mason. “It’s bad. What you’re seeing is statistics confirming the human stories that we’re hearing from residents.”
The vacancy rate in Peninsula South, which includes Mason’s District 7, fell from 0.7% to 0.4%, meaning of 9,000 rental units, only 36 are likely to be for rent.
The overall city vacancy rate of 1% means that there are about 500 apartments, out of 49,000, available for rent. To put that in perspective, an RBC report from September says the ideal vacancy rate for an urban centre is 3%. The last time Halifax saw 3% was 2016.
For the first time in recent memory, vacancy rates fell most outside of the city core. Dartmouth moved from 2.9% in 2018 to 0.5% and the Sackvilles shifted from 2% in 2018 to 0.5%.
The other notable takeaway from the CMHC report is that the total average rental increased 3.8% in 2019 over 2018. Most years the increase is about 2%.
“The thing really that I think is the biggest impact is that it’s really the first evidence of these tight market conditions translating into rental rate increases,” says Neil Lovitt, senior manager of planning and economic intelligence with real-estate consulting firm Turner Drake & Partners Ltd.
The average two-bedroom apartment now costs $1,202 monthly. In Bedford and Lower Sackville, average rent increased by 5.2% and 6% respectively.
“The last number of years people have been talking about the cost of rent going up, and sort of overall, that’s true,” says Lovitt. “But up until this year, we’d seen existing buildings more or less continuing along the same trajectory they always had. This year is the first evidence we’re seeing that just because of the the market is so tight, the existing buildings are now starting to escalate in prices as well.”
Mason says the approval of Centre Plan Package A, which regulates land use and development within the regional centre, in September was a start. “Things are going be to be approved quickly, that’s great,” he says. “But actually getting permits digging a hole in the ground, putting foundations in the building, it takes two to three years.”
A further complication to adding more rental units is a labour shortage in the construction trades. There are currently 4,000, rental units currently under construction, more than ever before, but we’re maxed out on what we can build at one time. And historically, says Lovitt, new buildings open with higher-than-average rents.
While many point to STRs as a key cause of our woes, Lovitt puts it fourth or fifth on the list of causes. In reality, the total number of entire home STRs on sites like Airbnb is about 750.
New provincial regulations will see STR operators required to register with the province or pay a $1,000 fine unless they live onsite. It also requires services that facilitate STRs in Nova Scotia keep records of local rentals. But as of yet, there’s no set date for the regulations to take affect.
“Short-term rentals are a very small part of the problem, but it is a problem at this point,” says Mason. “I’ll take those couple of hundred units, that would be great. But that’s not enough, that might mean that the vacancy rate in the South End might go from 0.4 to 0.6 which isn’t enough, right? But we still need them.”