Winnipeg rental apartment inventory rises, vacancy rate stays flat

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This article was published 17/12/2024 (342 days ago), so information in it may no longer be current.

A hefty 5.5 per cent increase this year in the number of rental apartment units in the Winnipeg market did nothing to loosen up tight vacancy rates.

According to CMHC’s 2024 Rental Market Report, the vacancy rate in the Manitoba capital was 1.7 per cent, down from 1.8 per cent in 2023 and below the national average of 2.2 per cent.

And while the newer, more expensive residential buildings may currently have more openings than their older peers, managers of those facilities are not complaining.

“As soon as any new inventory we manage comes on line, we have been renting out pretty quickly,” said Curtis Shewchuk, property manager of Sussex Realty, which has about 5,000 units in its local portfolio.

An oft heard renters’ refrain is rates are sky-high these days. In Winnipeg, average rent on a two-bedroom apartment in 2024 was up 5.3 per cent to $1,507 (not including condominium rentals).

“That’s one of the strongest year-over-year rent increases we have seen since 2013 in Winnipeg,” said Taylor Purdy, Canada Mortgage and Housing Corp.’s Calgary-based analyst who covers the Prairies.

That’s not to say rent controls are not working. The Manitoba government has a transparent formula for rent increases, set at three per cent in 2024 and 1.7 per cent for the coming year (with various provisions and exemptions).

Avrom Charach, a spokesman for Professional Property Managers Association and vice-president at Kay Four Properties in Winnipeg, said the process is there for anyone to see. Even applications for increases based on economic adjustments — when a capital expenditure is made — are on the accessible public record.

The Winnipeg market has seen solid rises in inventory of between 3.9 and 5.5 per cent (2024) per year since 2018, but prior to that, Purdy said such increases were unheard of.

He said as the Winnipeg economy has been strong, with population up 3.9 per cent and employment up four per cent, it has maintained a tight noose on the apartment rental market.

And while interest rates are being cut recently, mortgage rates are not coming down as fast — meaning people are continuing to rent longer than they might otherwise have in the prior lengthy period of low interest rates when owning a home was something much more attainable.

“So even though there were 3,800 new apartments units that came into the market over the past year, we continued to see tightness in the market because of the underlying economic fundamentals in the market,” Purdy said. “So even with a strong increase in new construction (in 2024), it was not enough to move the needle.”

The increase in average rentals rate on two-bedroom apartments and the year-over-year increase in new apartments in Winnipeg are both slightly above the national average.

And while the 5.5 per cent annual increase in inventory is one of the highest on record — and much higher than Edmonton, Saskatoon and Regina — it does not come close to the “unprecedented” 10 per cent growth in Calgary.

The CMHC report says significant growth in the population ages 15 to 24 and in non-permanent residents within the Manitoba capital region drove the strong demand. Winnipeg’s turnover rate remained steady, which means renters were on average just as likely to stay in their unit as they were in 2023, despite the increase in rental supply.

As Canada deals with a housing deficit, Charach said the high cost of construction makes it difficult for new builds to keep rents low.

Across the country, the supply of purpose-built rental apartments grew by 4.1 per cent in 2024, the highest increase in more than 30 years. That helped push the national vacancy rate to 2.2 per cent in 2024 from 1.5 per cent in 2023.

Purdy said there should be a gradual loosening in the market as interest rates decline. “People may start to get enticed to home ownership, but for now, in 2024, we have not really seen any super big movement in that way.”

He added it is common across the country for more expensive units to have higher vacancy rates and take longer to lease up.

The preponderance of new buildings in Winnipeg, some featuring amenities such as dog walker and pet bathing facilities, elaborate common rooms and fitness centres, are leasing up gradually.

“I don’t know what the future holds, but if you drive around the Perimeter (Highway) and see all the new stuff being built, you can get a bit of sense,” Shewchuk said.

martin.cash@freepress.mb.ca