According to the Spring 2015 report published by the Canada Mortgage and Housing Corporation (CMHC), the vacancy rate in Kingston remains low. The most recent data shows a vacancy rate (or percentage of rental units that remain empty) of only 2%! In addition, average rents have been increasing. In 2012, the average rent received for a 2 bedroom apartment in Kingston was $1,005. By 2015, the average rent for a 2 bedroom apartment in Kingston has risen to $1,095 per month.
The above news, of course, is great for existing landlords, which is partially why we are starting to see an influx of new units onto the market. There are some large proposals for the construction of more condo and apartment units in Kingston, especially to help satisfy some of the demand in the down-town area surrounding Queen's University. Indeed, a new proposal in Kingston calls for a large multi-unit residential building to take over the site formerly occupied by the Famous Players Cinema. This new development is expected to be well over the current height restriction in the down-town core, and offer a healthy number of new 2 bedroom units.
With mortgage rates still very low, investor demand for borrowing to finance the purchase of new rental properties is still quite strong. It is important, however, for any new investors to carefully consider if the property will still remain profitable should mortgage rates rise in the future. I would advise to calculate the break-even point for your new rental property, and carefully evaluate if you can still earn an income should interest rates rise 2-4 percent.
If you have any mortgage or financial questions, feel free to send me an e-mail.
Thanks for reading : )Matthew Clarke BA (Hons.), B.Ed., OCT.
Mortgage Agent & Financial Consultant
275 Ontario Street, Kingston