While demand for rental dwellings increased, the supply of rentals remained constricted
New York, NY (PRWEB) April 16, 2015
Over the past five years, the Apartment Rentals industry has moderately grown alongside rising demand and a constricted supply of rental dwellings. Industry players rent out housing units ranging from entire houses to apartments in multi-family buildings. In the five years to 2015, a declining, but relatively high unemployment rate restricted consumer's income levels, which, when combined with rising home prices, forced many to rent instead of buying a home. Furthermore, despite stricter immigrations standards, a positive stream of migrants pushed up demand for rental because migrants' typically lower incomes forces them into the rental market.
However, while demand for rental dwellings increased, the supply of rentals remained relatively constricted. Since homes, especially condos, compete with purpose built rental buildings for the same real estate and development resources, the past decade's increase in homeownership and condo construction greatly increased rental dwelling's development costs. According to IBISWorld Industry Analyst Maksim Soshkin, “the number of rental units nearly stagnated, with a large portion of supply driven by rented out condos.” As such, when relatively high unemployment, inflated home prices and increased migration increased demand for rentals, the restricted supply caused the rental vacancy rate to decline in the early part of the five-year period. This, in turn, allowed landlords to increase rents, pushing up industry revenue and profitability. However, loose mortgage lending standards and low interest rates made homeownership less expensive for those in a better financial position, thereby tempering demand for the industry. Nonetheless, industry revenue is expected to increase in the five years to 2015.
“In the five years to 2020, industry revenue is forecast to grow. A projected decline in the national unemployment rate and increasing incomes will drive demand for rentals, allowing landlords to raise rents,” says Soshkin. However, while this is anticipated to make homeownership more affordable, stricter mortgage standards and climbing interest rates will temper the housing market and reduce its threat to the rental market. Additionally, positive migration and a climbing urban population will add to industry demand. Conversely, the recent slump in oil prices may hinder economic growth and industry prospects.
For more information, visit IBISWorld’s Apartment Rentals in Canada industry report page.
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IBISWorld industry Report Key Topics
Operators in this industry act as lessors of buildings that are used as residences or dwellings. Industry participants are owner-lessors of residential buildings and establishments that rent real estate and then act as lessors by subleasing it to others. In addition to apartment rentals, the industry also includes attached and detached houses and row houses.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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