Experts say the peak may have passed in this once-frenzied market
After a period of explosive growth, Calgary’s rental market appears to be taking a breather. While still more affordable than Vancouver or Toronto, the influx of new residents seeking cheaper housing has pushed rental rates up faster than anywhere else in Canada this year. However, recent data suggested this upward trend may be leveling off, a CBC News report highlighted.
“I think we have peaked here right now,” said Mike Bucci, vice president of Bucci Developments, citing increased renter choice as a key factor. This sentiment is echoed by data from Rentals.ca, which showed a decline in Calgary’s rental prices over the past two months, bucking the usual August surge driven by student demand.
Further evidence of a cooling market includes the return of incentives like move-in bonuses, a scheme abandoned during the peak of competition. While prices remain high historically, the frenzy of multiple viewings and immediate rentals has subsided, according to real estate broker Kyle Dovigi.
“Rents were incredibly strong — probably the highest they’ve ever been — earlier this year,” said Dovigi. “Fifteen people [would] be going to see a unit at a time. It would be renting the day that it gets posted… that has definitely weakened over the last six months.”
Shift in rental market
This shift coincides with a national trend of softening rental markets in major cities, while smaller markets experience growth. Experts attribute Calgary’s changing landscape to two primary factors: increased housing supply and potentially moderating population growth.
Calgary experienced record-breaking housing starts last year, fuelled by apartment construction. This building boom, driven by the province’s population boom, is expected to continue, with an estimated 45,000 new housing starts anticipated in Alberta this year and next.
“[There’s] more choice,” said James Ha, president of the Boardwalk REIT. “Over the last couple of years, we've seen the housing market that had much lower vacancy. Today, we're seeing more availability in these newly developed apartment communities.”
However, the long-term impact of this increased supply remains to be seen. Richie Bhamra, executive vice-president with CBRE, cautioned that rising construction costs could still put upward pressure on rents.
“To make economic sense of developments, we’re going to continue to see upward pressure on rents,” said Bhamra. “I think we’re in somewhat of a balanced market right now. We just need to make sure that that continues with balanced construction.”
Another factor influencing the rental market is the potential for slower population growth, linked to the federal government’s new immigration limits. ATB Financial’s chief economist, Mark Parsons, predicted this will moderate Alberta’s population growth to around 2% next year.
Interestingly, the search for affordability within Alberta seems to be driving a new trend: Edmonton’s rental market is now heating up. Rentals.ca reported a 12% increase in apartment rents in Edmonton, the fastest pace nationwide.
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