Rent not increasing with inflation
Market analyst says people earning more,
but renter's housing costs remaining steady
Karen K. Ho
Northern News Services
Wednesday, June 24, 2015
SOMBA K'E/YELLOWKNIFE
The Canadian Mortgage and Housing Corporation recently released its Northern report on housing, but Yellowknife's vacancy rate has already dropped lower than expected.
Mike Dosdam, contractor for Northern Property REIT, works on the Dorset Apartments on 53 Avenue. The company is investing about $10 million in its Yellowknife properties to help lower vacancies. - Karen K. Ho/NNSL photo
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"Somebody's occupying these homes and I think it points to population growth," Century 21 real estate agent agent and city councillor Adrian Bell told Yellowknifer.
The corporation's own rental market survey said that the rental vacancy rate is currently 2.8 per cent for the month of April, much lower than the 3.5 per cent forecast for the year in its report about housing in the three major Canadian Northern cities.
Corporation market analyst Brayden Batch told Yellowknifer that average rental rates came down first, the vacancy rate fell soon afterwards and that no change in the average listed price for a two-bedroom apartment is a really good thing.
"Even with the consumer price index increasing the cost of other items, with people earning more and rents not rising with inflation, this means rent is more affordable," he said. "Your purchasing power is increasing."
One of the dominant landlords in the city, Northern Property REIT, is currently spending about $10 million on various renovations on its buildings around the city in a bid to get back into the market and decrease its vacancy rate.
Vice-president of operations Lizaine Wheeler estimated the Northern Property vacancy rate is currently at about 11 per cent and attributed the decrease from the 15 per cent rate it used to be from lowered rents last year.
However, Northern Property is aiming to bring that number even lower through renovations and improvements in hallways, carpets and lobby areas.
"We'd like it to be around four to five per cent," Wheeler said.
Bell wasn't really surprised by anything listed in the report, save for the fact that it said pre-fabricated and modular housing is providing most of the growth in single family units and that trend is expected to continue.
A lot of what happens in Yellowknife's real estate market is also dependent on what the city's planning department has decided to do.
"Right now, we don't have any new land coming online for custom home building," he said, adding that the lake shore development, with potentially 165 units including some slated for multi-unit apartments, will soon dominate the market.
Bell said that a report like the Canadian Mortgage and Housing Corporation's that tries to measure economic activity and provide projections for the city is difficult to do due to the small population.
"It's hard to be accurate," he said.
Ultimately, Bell said the big takeaway from the Northern housing report is the influence of the influx of new modular homes coming on the market that are competitively price and in able supply.
"We also saw that happen when all the condos were built two or three years ago," he said. "Condo prices dropped."
When the city gets it hand on lands, Bell said that there should be a discussion about how much is released because that could impact home prices in whatever niche they end up competing against.
"It's going to affect people's property values," he said.
