IQALUIT - There's nothing like "zero vacancy rate" to strike fear into the hearts of apartment hunters.

It rarely happens in Canada, but no one would ever confuse Iqaluit with the rest of the country.

An evaluation of Iqaluit's rental released last week by the Canadian Mortgage and Housing Corporation (CMHC) is not pretty, but neither was it unexpected.

"Nothing much has changed with housing in this town," said Terry Ma, CMHC's corporate representative in Iqaluit.

According to their information, Iqaluit has the lowest vacancy rate in Canada - zero - and the highest rents.

The rents are particularly frightening. A two-bedroom apartment in Iqaluit costs $2,094 per month.

Fort McMurray is the next highest, with its oil sands boom, at $1,478.

In third place is Yellowknife, with rents of $1,365.

Of the three Northern capitals, Whitehorse boasts by far the cheapest rents at an average $700 per month for a two bedroom apartment.

Back in Iqaluit, the lack of housing is making it difficult to recruit people to jobs, according to Richard Goatcher, senior CMHC analyst for the North.

"Rents are so expensive and housing so hard to find it makes it difficult to recruit people from the South," he said.

However, the government has still been able to fill more jobs recently, he said, which has contributed to the "very tight" rental situation.

There is one group that is enjoying the situation - hotels are not complaining.

"It's got a positive effect," said Sanjay Uppal, general manager of Capital Suites hotel in Iqaluit. "While companies are looking for housing for employees, they look to hotels."

CMHC analysts were in Iqaluit last week to make presentations on the housing information they collected in 2006.

While CMHC was there, a working group was created to address the housing situation, said Ma.

Its focus is to discuss problems and look for solutions, he said.

Much of it is educating people on the particularities of Iqaluit housing, said Ma.

"A lot of people have expectations of what it should be and the reality is it is what it is."

Some of the realities are the high cost of construction, said Goatcher.

"They're really hampered by the shipping season, which of course is so short," he said.

The short season, coupled with an unforgiving landscape and a shortage of available labour all work in tandem to create a challenging construction environment, said Goatcher.

"You've got a marketplace where it's extremely expensive to build."

Construction is underway in a new subdivision called the Plateau, with 52 lots to be developed, according to the CMHC.

It is hoped that it will alleviate the situation somewhat. It is needed, according to Ma.

"It affects the whole labour market," he said of the housing market.