Tenants in Ottawa paid an average of $108 a month more for an apartment in 2019 compared with a year earlier, thanks to “robust demand” for rental accommodations in the capital, according to a new report from the Canada Mortgage and Housing Corp.

The average rent in the city stood at $1,281 in October, up 8.4 per cent from a year earlier, the national housing agency said in its latest rental market report released Wednesday.

CMHC said rising housing prices, stricter mortgage rules and steadily accelerating overall asking rents are pushing tenants to stay put in their current dwellings. As a result, the stock of vacant units dwindled in 2019, driving up rents even further.

“Steady demand for rental apartments together with low vacancy rates encouraged the rise in market rents once a unit was vacant,” the report said, noting that asking rents on vacant two-bedroom units were 18.4 per cent higher than rents on occupied units.

The fixed sample average rent for a two-bedroom apartment in Ottawa rose eight per cent to $1,410 in 2019, higher than the previous year’s increase of 5.8 per cent, with rents for one-bedroom units jumping by a similar percentage to an average of $1,178.

The city’s overall vacancy rate ticked up slightly last year to 1.8 per cent, compared with 1.6 per cent in October 2018. However, the report said only bachelor apartments showed a “significant” jump in vacancy rates, which rose from 1.3 per cent to 2.2 per cent.​

Builders are scrambling to address pent-up demand in the city’s red-hot rental market, launching nearly 2,300 new apartment starts in 2019 through the end of November following a 2018 that saw them begin work on almost 2,500 new units. CMHC said about 1,230 new units were added to Ottawa’s rental stock in 2019, with 1,086 of those now occupied.

Click here to hear David Sali's conversation with 1310 News' Rob Snow on Wednesday discussing the CMHC report and the state of Ottawa's rental market. The interview starts at 19:28.

The agency credited “strong population, employment and earnings growth” for fuelling that demand. Noting that Ottawa is home to two universities and two major colleges, the agency also cited local and international students as a “key force” in a tight rental market.

“Furthermore, strong employment growth for the key rental age groups, those 15-to-24 and 25-to-44, has supported their respective demand for rental accommodations,” the report added. “These two groups are key to the rental market as they are often students and young professionals who have yet to make the transition into homeownership.”

Vacancy rates in Sandy Hill and Lowertown (2.7 per cent) jumped the most in 2019, followed by the downtown core, where 2.6 per cent of rental units were empty last October.

On the Gatineau side of the river, the overall rental vacancy rate held steady at 1.5 per cent last year, despite more than 1,200 new units being added to the market.

“Even with this surge in rental housing construction, the increase in demand was sufficient to keep the vacancy rate unchanged,” CMHC said, crediting robust job growth, particularly for young workers aged 15 to 24, for attracting new residents to the city.

In addition, the agency also noted that fewer young tenants were looking to buy homes than in the past, adding the market is also facing pressure from downsizing baby boomers who are selling their houses and moving into rental apartments.

“While this trend is less pronounced among baby boomers than among their parents when they were the same age, the baby boomers’ significant demographic weight is increasing demand for rental housing,” the report said.

Average rents in Gatineau rose 4.5 per cent to $847 last year. Two-bedroom rents averaged $874, up 4.2 per cent year-over-year ​– the highest increase in more than 15 years.

The average rent for two-bedroom apartments built since 2005 was substantially higher at $1,100, yet vacancy rates in those units sat at just 0.3 per cent, the report said.

“This robust demand may have encouraged developers to focus on this segment of residential construction in recent years,” it said.

Across the country, rental vacancy rates last year hit their lowest level since 2002 after a third consecutive year of declines, CMHC said.

The agency said the national vacancy rate for purpose built apartments was at 2.2 per cent, down from 2.4 per cent in 2018 for all bedroom types. The vacancy rate in condo rentals was at one per cent, down from 1.4 per cent.

Vancouver's dedicated rental vacancy rate was 1.1 per cent, Toronto and Montreal were at 1.5 per cent and Halifax was one per cent, while vacancy rates for condos were 0.3 per cent in Vancouver and 0.8 per cent in Toronto.

Prairie cities saw much higher vacancies for dedicated rentals, including Regina at 7.8 per cent, Calgary at 3.9 per cent, and Winnipeg at 3.1 per cent.

Nationally, average rents increased by 3.9 per cent for a two-bedroom rental apartment as availability tightened, the fastest pace of same-sample rent growth since 2001.

Vancouver had the highest rent for a two-bedroom apartment at $1,748 after a 4.9 per cent average increase, while for Toronto it was $1,562 after a 6.1 per cent climb. Rents were much higher in condo rentals, averaging $2,476 for a two-bedroom in Toronto, and $2,045 in Vancouver.

​– With files from the Canadian Press