Peterborough’s apartment vacancy rate returns to all-time low of 1.0%

Peterborough’s apartment vacancy rate dropped to 1.0 percent in 2023, according to new data released by the Canada Mortgage and Housing Corporation last month. It’s the third straight year that the local vacancy rate has hovered around 1.0 percent, which is the lowest it’s ever been. 

The CMHC surveys rental markets across Canada over a two week period every October to determine average rents, vacancy rates, and other statistics. The survey only targets purpose-built rental structures with three units or more.

For Annie Hedden, the manager of Peterborough’s Housing Resource Centre, the new vacancy rate number didn’t come as a big surprise. She said tenants in the city currently face a “stressed rental market” and are struggling to find places to live. With so few units available, tenants are having to settle for inadequate apartments that don’t meet their needs in terms of accessibility, affordability, location, size, and other factors, she added.

While not surprised, Hedden said she was “disappointed” to hear that the local vacancy rate remains so low. “It’s going to exacerbate the challenges” facing tenants, she said.

Hedden pointed out that the federal government has affirmed adequate housing as a basic human right. She said a healthier vacancy rate of around 4 percent would enable people to more easily access that right. The last time Peterborough’s apartment vacancy rate was in that range was in 2015, when 3.7 percent of the city’s purpose-built rental apartments were vacant, according to the CMHC.

Peterborough isn’t alone. Vacancy rates fell as rents surged across Canada last year, according to the CMHC’s new report. The country’s average vacancy rate was 1.5 percent in 2023, the report found.

Peterborough’s vacancy rate is no longer the lowest in the province, as it was in 2021 and 2022. That distinction now goes to Kingston, where the vacancy rate fell to 0.8 percent in 2023. Peterborough is now second-lowest.

The CMHC identified three factors driving high demand for rental housing in Canada: increased immigration, strong employment growth among young people, and the high cost of home ownership keeping people in the rental market longer.

Canadian rents rose by record rates last year, CMHC also reported, and the proportion of tenants nation-wide who owe money to their landlords increased from 6.5 percent to 7.8 percent.

In Peterborough, the average rent for a two-bedroom apartment reached $1,411 in 2023 — an increase of 5.4 percent from 2022. But that number is kept low because it includes long-term tenancies where residents are still benefiting from rent control. For new tenancies, where no rent controls are in place, the average rent for a two-bedroom unit in Peterborough was $1,791 in 2023.

In Ontario, most landlords can only raise a tenant's rent by a limited amount each year unless they apply for an exemption. But there are no limits on how high an Ontario landlord can raise the rent in between tenancies. In addition, the Ford government eliminated all rent controls for apartments built after Nov. 15, 2018.

A spokesperson for the CMHC said the "significant disparity" between units that have been occupied for a long time and units that have recently turned over "helps to explain why turnover rates are so low in the [Peterborough] region. Renters are discouraged from moving since they will have to pay a premium to change units.”

"We need to get more housing built," wrote Mayor Jeff Leal in a statement reacting to the latest vacancy rate numbers. "It’s a top priority for myself and our entire City Council to do everything in our power to ensure the local building industry can build housing.”

Leal stated his housing task force, which he established late last year, is “working with a sense of urgency” to produce “actionable suggestions” to help the community build 4,700 new homes by 2031 — a target set for Peterborough by the province.

Leal pointed to some actions the city has already taken, such as loosening zoning restrictions to allow more housing and moving forward with the construction of a city-owned 53-unit affordable apartment building at 681 Monaghan Road.

But the city’s efforts don't appear to have helped with the overall supply of rental housing in 2023, at least not according to the CMHC. The total number of rental apartments in Peterborough increased by just 9 in 2023, according to the CMHC.

Leal stated that with the exception of city-owned projects, the city’s role is to grant approvals, not build housing itself. He said private developers are facing “factors outside our control such as challenging market conditions, high interest rates, and a shortage of construction trades workers in Ontario.”