A new report confirms apartment vacancies in the London area have dropped in the last year.
A semi-annual survey by the Canada Mortgage and Housing Corporation (CMHC) shows vacancies in the London-St. Thomas area fell to 3.7% in April, down from 4.7% in April 2011.
Average rents went up 1.4% in the same period.
CMHC analyst Margot Stevenson said the decline in vacancies is partially due to growing demand with larger enrollments at Western University and Fanshawe College .
But she said the supply of apartments may also be tightening because of the uncertain economy.
“Potential first-time home buyers are choosing to stay in their apartments a bit longer,” said Stevenson.
The CMHC spring survey follows up on another taken last fall, showing the London area vacancy rates down to 3.8% in October, down 5% from the 2011 fall survey. The vacancy rate had been stuck at 5% for two years, near the historic high of 6%.
London saw a boom in apartment construction about five years ago that drove up overall housing starts.
But last year the market slowed dramatically with starts on only 400 apartment units.
The CMHC had predicted apartment construction would rebound this year to satisfy demand from baby boomers and professionals moving to the redeveloping downtown core.
But the latest CMHC monthly survey showed starts on only four apartment unit so far this year compared to 193 units in the first five months of 2011.
Stevenson said several large apartment projects should get underway later this year, starting with a 287-unit building in Old East London. Medallion Developments is now completing a 324 unit tower on the same site.
Stevenson said other future apartment projects include a student-focused building at 1235 Richmond Street and a Tricar Developments apartment tower on Sunningdale Road.
Stevenson said the lower vacancy rates will eventually spur the apartment market.
“Things should start improving this year but it will not be near the peak of over 1,000 units that we saw a few year ago,” said Stevenson.
Across Ontario, vacancy rates declined to 2.3 per cent in April, down from 2.5 per cent in the spring of 2011.
London has the third highest vacancy rate in major Ontario cities, behind Windsor and St. Catharines. Toronto had the lowest rate of 1.5%%