A new report published by the Canadian Mortgage and Housing Corporation (CMHC) shows Kingston once again had the second-lowest rental vacancy rate in the province, at 1.2 per cent in 2022. According to the CMHC’s annual Rental Market Report, the only municipality in the province with a vacancy rate lower than Kingston’s was Peterborough, at 1.1 per cent in 2022.
In terms of how Kingston’s 2022 numbers compared to previous years for the municipality, the report indicates the city’s vacancy rate went statically unchanged from the 1.4 per cent observed in 2021. “The stability in the apartment vacancy rate resulted from growth in both occupancy and the rental universe,” the report notes.
“The vacancy rate stabilized because rental demand kept pace with supply growth in 2022. Improved economic and demographic conditions for renters, like recovery in employment and renewed student inflows, supported demand.”
Despite the fact that Kingston’s vacancy rate remained stable throughout 2022, the report does show signs of growth in the city’s housing market. According to the report, “[Kingston’s] apartment universe expanded by nearly 405 units (2.8 per cent), the largest increase since 2004.” The increase was a result of new units entering the market, as well as the return of previous units which had been temporarily removed from the market.
While the overall supply of rental units in Kingston expanded in 2022, so too did the demand for units, as the local economy continued to rebound from the effects of the COVID-19 pandemic. “In October 2022,” the report states, “overall employment was well above the pre-COVID-19 level. Employment for the 15 to 24 age group, whose members have a high propensity to rent, improved as well.”
Along with the increase in supply and demand for 2022, Kingston’s rental market also saw an increase in the cost of rent, with the average two-bedroom unit costing $1,471 per month, up 4.9 per cent from 2021. According to the report, the increase in rent can be attributed in part to the high number of turnover units: that is, units which are being taken over by new tenants at higher rent than that paid by the previous tenants.
“Within the same structure, a two-bedroom unit that turned over to a new tenant was, on average, 21.6 per cent more expensive than one that didn’t turn over,” the report states. “A combination of low vacancy rate and increased pent-up repair and renovation costs encouraged property owners to raise rents once units were vacant.”
According to CHMC representative David Harris, “the rent increase for turnover units was not uncommon in Ontario markets in particular,” with markets such as London and Kitchener-Cambridge-Waterloo experiencing similar increases in rental rates for turnover units to those of Kingston. In terms of overall market affordability, Harris said that “less than 17 per cent of Kingston’s… private rental stock is affordable to renter households” in the $28k to $40k income bracket.
The demand for affordable housing in Kingston is nothing new, as local politicians look for ways to address the city’s housing crunch. At his recent State of the City address, Mayor Bryan Paterson indicated that housing was a top priority for Kingston’s new City Council. According to Harris, “an all-hands-on-deck approach is needed to address housing supply shortages and affordability issues across the country, particularly in large, fast-growing cities like Kingston.”
“Despite strong, consistent rental stock growth in Kingston, demand continues to outpace supply,” Harris asserted. “To address the underlying supply issue, a significant increase in housing stock is necessary.”