Winnipeg Free Press
November 27th, 2002
Tight rent controls blamed for lack of apartments
By Geoff Kirbyson
DESPITE near-record-low mortgage rates, booming housing starts and stagnant population growth, apartment vacancies in Winnipeg declined for the fifth consecutive year, according to a report released yesterday.
The seemingly incongruous result, leaving Winnipeg with the lowest vacancy rates on the Prairies and the fifth-lowest in Canada at 1.2 per cent, down from 1.4 per cent a year ago, arose because the number of rental units in the city declined by 85 over the past year, said Vinay Bhardwaj, regional manager for market analysis at Canada Mortgage and Housing Corp.
Bhardwaj said CMHC's annual rental market survey found just 616 privately owned apartments in Winnipeg available for rent out of a total of 53,374 in the city. During the last year, 129 units were added to what he called the "rental market universe," but 69 were converted to condominiums and 145 were removed through demolition.
"The vacancy rate in Winnipeg was considered low last year, now it's even lower," Bhardwaj said in a telephone interview from Calgary yesterday.
Only Montreal (0.5 per cent), Quebec (0.7 per cent), Gatineau (0.3 per cent) and Kingston (0.9 per cent) had lower vacancy rates than Winnipeg.
Bhardwaj noted the vacancy rate in eight suburban areas, including St. James-Assiniboia, West Kildonan, Fort Garry, St. Boniface and Transcona, inched up from 0.4 per cent to 0.5 per cent, because the conditions for home ownership have been so favourable during the past year.
"People have been taking advantage of low mortgage rates and moving into homes, particularly in the $50,000 to $150,000 range. That's the hot market in Winnipeg right now," he said.
But apartment vacancies in the city's core declined from 2.4 per cent to 1.9 per cent because there isn't sufficient supply in the less-than-$50,000 home market.
"There are a lot of people in the inner city that would like to move into home ownership but they can't find the desirable unit," he said.
Tonya Moreton, executive director of the Professional Property Managers Association, said the CMHC's report came as little surprise to her organization, which represents about 60 per cent of rental properties in Manitoba and about 70 per cent in Winnipeg.
"There hasn't been any new (apartment) construction in almost 20 years because of the stringent rent controls we have in Manitoba," she said in an interview yesterday.
"This is the only industry where you have to pay all your money out first and wait a year before you start to recover it."
For example, she said, inflation rose by 2.6 per cent last year, but apartment landlords were only allowed to increase their rents by 2.0 per cent, while inflation this year is expected to be 2.2 per cent, but landlords can only charge an additional 1.0 per cent.
"For the last 16 years, the guideline rent increase has lagged the CPI (consumer price index) by 13 per cent," she said.
Unless legislation is overhauled, making it more attractive for developers to build apartment blocks, she said would-be renters will continue to face more competition for a dwindling number of suites.
"It's not feasible, it costs too much to maintain apartments. They're going to end up being removed from the market altogether or converted into different uses, like condos or commercial space," she said.