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Simeon Mitropolitski is a Canadian analyst, of Bulgarian origin, and a former syndicated columnist with the Bulgarian News Agency (BTA). He is the author of several hundred articles dealing with hot political and economic topics, both national and international.

He was part of the first group of Bulgarian intellectuals and students that began the opposition movement that finally put an end to the communist regime in this country in 1989, and in 1996-1997 participated in international observation teams during the elections in several Balkan countries - Romania, Albania and Bulgaria.

In 2002 Simeon and his family moved from Bulgaria to Canada where they live now in Montreal, province of Quebec. Simeon is a Master of Political Science from McGill University and a B.A. of Political Science and History.

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Many big cities in Canada nowadays experience a shortage of rental housing, especially for the so-called social housing. In Toronto and Vancouver (first and third largest cities in the country) the vacancy rates of apartments though almost stable in the last 2-3 years are lower than 1.0 %, which puts an upward pressure on the rents. In Montreal (second largest city) where not so far ago the tenants enjoyed relatively lower rents due to some specific local reasons, even there we see a coming crisis on the residential rental market. On the contrary, in the capital city of Ottawa, considered to be among the most beautiful capitals in the world, we see an increase in the vacancy rates in 2001. What has happened last year and why the situation on the market in Ottawa seems to contradict the general trends in Canada?

Let's look closer on the facts. During 90s the vacancy rates in Ottawa get lower and lower and by the end of 2000 they almost reached the zero (0.2 %) meaning there are immediately available only 2 apartments out of 1000. The same year (2000) the rents went up by 12.0 %, the largest increase in Canada. One year later the rents went up by only 4.0 % reaching an average of $914*. In the same time the vacancy rate also went up from 0.2 % to 0.8 %.

There are two main reasons for this increase in the vacancy rate and both of them are based on the market forces activity. When you have a cup of water half empty it's easy to fill it a bit more without pouring the liquid out of it. When the cup is full even the smallest drop can cause a spill out.

This is exactly what happened in Ottawa. During the second half of 90s the nation capital (in the province of Ontario) almost exhausted its pool of available rental properties. When this happened people turned their eyes to the neighboring city of Hull (in the French-speaking province of Quebec) where rents were relatively lower. In 1997 the vacancy rate in Hull was 9.4, probably the highest in the country, now it's less than 1 percent (0.6 %) even lower than the level in Ottawa.

What is the difference for the Ottawa residents, which has moved to Hull (except that their new rents are lower)? Nothing, or almost nothing. They change the province not the urban area. Two cities are separated only by a river. The only major inconvenience is that the jobs (mainly for governmental officials) remain in Ottawa (Ontario) so the new residents of Hull (Quebec) have to drive to and from work longer than 5-10 minutes they have been accustomed to.

The second major reason for the vacancy rate increase in Ottawa in 2001 was the bigger rental supply (bigger investment activity) and stronger movement towards home ownership. Again the market rules have proven that at some particular point (when the cup is full), the investment activity of supply increases to balance the increase in the demand. On the other hand, in a market economy there couldn't be a big gap in the rent levels between two neighboring cities when the living conditions are close and there aren't artificially created regulation obstacles.

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*In Canadian dollars ($1 US = $1.6 CAD).

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