2023 Recap: Saskatchewan Vacancy Hits An All Time Low 

Key Takeaways from Yardi’s latest Canadian Multifamily Report

In 2023, Canada’s multifamily market exhibited a strong performance, a trend projected to continue into 2024 due to prevailing supply-demand dynamics. The national average for in-place rents rose to $1,480, while the vacancy rate dropped to a multi-year low of 2.7%. Saskatchewan’s market followed a similar trajectory, with in-place rents and vacancy rates at $1,277 and 2.7% respectively. This was influenced by the province’s population exceeding 1.2 million population, the largest increase in over a century. This significant population growth has been instrumental in shaping the province’s multifamily market trends.

Double-digit new lease rent growth

Yardi’s rental data indicates substantial new lease rent growth across Canada, with increases above ten per cent in nine out of the 12 cities and five out of the seven provinces tracked. Nova Scotia (16.1%) and Ontario (15.8%) experienced the highest year-over-year growth, while Toronto led the cities with an 18.5% increase, driven by its rapidly growing population. Amidst this, Saskatoon and Saskatchewan also saw significant growth rates for new leases at 12% and 10.85% respectively. However, the weakest growth for new leases was recorded in Manitoba (3.4%), attributed to Winnipeg not experiencing the strong gains seen in other cities. This situation continues to pose challenges for those seeking affordable rental options, especially as demand is projected to remain high in 2024.

Growing consensus on the need for more rental housing

In response to the evolving multifamily landscape, both federal and provincial governments in Canada have intensified their efforts to stimulate the development of purpose-built rentals. Measures such as tax exemptions for developers and the launch of a $4 billion Housing Accelerator Fund have been introduced. Despite these proactive initiatives, the number of new developments is declining, primarily due to escalating construction and labour costs.

Securing debt funding for property development has also become a significant challenge. Major banks, traditionally the financiers of property developments, have become more cautious due to ongoing economic uncertainties and difficulties with presales. This has made it increasingly difficult for developers to secure the necessary funding for new projects. As a result, despite government efforts to stimulate supply, the housing market continues to face significant hurdles.

Optimistic economic outlook

After a slowdown in the second half of 2023, Yardi predicts that Canada’s economy will remain weak through the first half of 2024. However, Saskatchewan is forecasting a 1.1% GDP growth in 2024. In October 2023, the province’s employment reached a historic milestone with more than 600,000 individuals gainfully employed, securing the second position in terms of employment rate (64.9%) and labour force participation rate (67.4%). Even with these solid numbers, growth is not expected to reach that level due to the constraints consumers have faced due to inflation and increasing debt-service costs.

Comparing Canada and the U.S.

Both Canada and the U.S. experienced strong demand and rent growth in 2021 and 2022 after the pandemic. However, in 2023, while rent growth increased in Canada, it plateaued in the U.S. This was largely due to the significant supply response in the U.S., with 1.2 million apartment units currently under construction and over 1 million units expected to be delivered in the next two years.

In contrast, Canada has seen a disconnect between housing and immigration policies. While the population is growing at a much faster rate than in the U.S., housing construction remains weak. This has resulted in rapid rent growth, migration of households in search of more affordable locations, and renters staying in place longer to avoid significant increases in housing costs.

Yardi’s commitment to Rental Transparency

In the current economic climate, data-driven decisions have become increasingly important. Yardi’s comprehensive reports provide the necessary insights for you to invest in real estate and grow your business with confidence. The Q4 2023 market analysis, which includes data from over 470,000 units and 5,300 properties across Canada, offers a review of in-place rents, lease-over-lease rent growth, vacancy rates, and annual turnover percentages by province, census metropolitan area (CMA), and bedroom type. To stay updated on these trends in Saskatchewan, Western Canada, or on a national level, consider subscribing to Yardi’s multifamily quarterly report.