Yellowknife (Dec 24/04) - The number of vacant apartments in Yellowknife has reached a two-year high, but renters should expect to pay more for accommodations in the new year, according to industry officials.

The rising vacancy rate has been offset by the skyrocketing price of oil - which touched $55 U.S. a barrel last week. Those numbers represent a 60 per cent increase from the same time last year.

The resulting rise in heating costs has prompted Yellowknife's largest landlord, Northern Property (REIT), to raise rents between two and four per cent in 2005.

For a typical two-bedroom apartment that costs $1,300 per month, that means an increase of $25 to $50.

"All of our buildings are heated with oil, so our costs have gone up significantly," said Darren Pelly, regional property manager with the company.

Northern Property controls roughly 50 per cent of rental units in the city.

Pelly says the company is spending anywhere from 30 to 55 per cent more per month on heating, a figure that has been exacerbated by frigid temperatures. Other Yellowknife property companies are experiencing similar cost overruns.

MacKenzie Management, which owns 72 units in the city, raised rents earlier in 2004 to make up for rising heating costs, said manager Dave McCann.

"Fuel has been a big factor," he said. "Hopefully the price will stabilize and come down again."

While rents - already among the highest in country - continue to rise, Yellowknife's vacancy rate has reached a two-year high, according the Canada Mortgage Housing Corporation (CMHC).

Roughly three per cent of rental in units in the city sat empty as of October 2004. The numbers represent a 10-fold increase compared to October 2002. The increase was spurred mostly by a boom in apartment construction.

CMHC also reports low mortgage rates, a surging economy and high rents have "enticed many renters into home ownership."

"The market has lightened up a bit," said Pelly.

But he did not expect rental prices to come down in the near future, saying it will take some time "to absorb the new units."

Rental increases will make things difficult for Yellowknifers already struggling to get by in one of the country's most expensive cities, said Karen Hoeft of the Salvation Army.

"People will have to take their food money and put it toward their rent," she said. "People making $10 to $15 an hour simply can't afford it."

But the responsibility for rising housing costs does not rest solely with property management companies, Hoeft said.

"As a community we need to think about affordable housing," she said.

Hoeft pointed to a situation earlier this month where several Yellowknife residents vocally lobbied against the construction of low-cost housing on Bartesko Court in the Range Lake area.

During a contentious city council meeting that ultimately resulted in the project being quashed, Coun. Bob Brooks said: "I'm not willing to do affordable housing at the expense of destroying a neighbourhood." Hoeft said city council and the territorial government should make low-cost housing a priority.

"It doesn't matter if we have a higher vacancy rate if the people who need an apartment can't afford one," she said.