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As average rent prices in Canada hit record highs, experts say it’s going to take more than just interest rate hikes to cool the red-hot market. Beyond high rates designed to curb demand, Canada’s rental market is in desperate need of more supply, said Giacomo Ladas, director of communications for Rentals.ca.
The online rental listings platform, in collaboration with real estate research firm Urbanation, released new data on average rent prices on Sept. 12. The latest monthly report shows the average asking rent in Canada hit a record-breaking $2,117 in August, representing a 1.8 per cent increase month-over-month.
With the Bank of Canada’s recent decision to hold its policy interest rate steady at five per cent, and the next announcement scheduled for Oct. 25, it’s possible that rent prices may cool slightly in the weeks to come, Ladas said. Despite this, he said, it remains necessary to address the growing gap between supply and demand in the rental market.
“The supply and demand issue plays the biggest role in the rise in rent prices,” he told CTVNews.ca in a telephone interview last week. “It’s not going to get better until more supply comes into the market.”
Rent prices have steadily increased over the last few months, according to data compiled by Rentals.ca, which looks at figures attached to new listings, not what existing tenants are paying each month. This comes at a time when Canadians are increasingly struggling with a lack of affordable housing.
Rising rent prices are also contributing to an overall increase in Canada’s Consumer Price Index (CPI). Recent data from Statistics Canada shows rent prices rose 6.5 per cent annually in August, pushing Canada’s overall inflation rate to four per cent.
When looking at supply, a report released by the Canada Mortgage and Housing Corporation (CMHC) on Sept. 13 states that an additional 3.5 million housing units must be built by 2030 in order to restore affordability to levels reported in 2004. This figure goes beyond units that are already projected to be built by that time, according to CMHC deputy chief economist Aled ab Iorwerth.
“We need a tremendous amount of new housing, particularly in the provinces of Ontario, British Columbia and increasingly, Quebec,” Iorwerth told CTVNews.ca in a telephone interview last week.
Although the report has not outlined how many of these units would be for sale versus to rent, Iorwerth said that rental units “will have to be a part of any solution for [housing] affordability.”
“Currently, around a third of Canadians rent, so there’s a tremendous need for new rental supply, particularly as homeownership has gotten out of reach,” he said.
Few rental properties on the market combined with high demand means that landlords can get away with sharply increasing their asking prices after an existing tenant leaves, Iorwerth said. Looking at the CMHC’s latest rental market report, growth in demand for rental properties outpaced any gains in supply last year. As a result, the national vacancy rate – or the percentage of unoccupied rental units – fell to 1.9 per cent in 2022, the lowest level since 2001.
“If there were plenty of units available, any rent increase would be significantly less,” he told CTVNews.ca.
Part of the solution must involve more private sector investments to expand Canada’s current housing supply, Iorwerth said, as well as the construction of more purpose-built rental structures intended for long-term accommodation.
MAJOR URBAN HUBS SEE HIGHEST RENT PRICES
Based on the report by Rentals.ca, asking rents in Canada increased by an average of about $100 per month over the last three months.
Residents of Vancouver are seeing the highest average rent prices for both one- and two-bedroom units, at approximately $2,990 and $3,880, respectively. In the second spot is Toronto, where the average price of a one-bedroom unit is $2,620 while those looking for a two-bedroom unit can expect to pay about $3,413. These figures represent an aggregate of average rent prices for apartment units and condominiums, as well as houses and townhomes.
Ladas describes both Toronto and Vancouver as experiencing “the perfect storm,” as they are not only viewed as desirable places to live by newcomers, but also maintain some of the lowest vacancy rates in Canada.
Although rental apartment construction has remained high in recent years, demand has also been strong, Ladas said. Contributing to this demand is the country’s recent population growth and a lack of housing affordability, preventing would-be homeowners from leaving the rental market.
“People are a lot more comfortable staying in their apartments than going to the ownership market,” Ladas said. “Many can’t afford [mortgage] rates the way they are.”
Cities in both British Columbia and Ontario occupy the top 15 spots on the national ranking by Rentals.ca.
CALGARY, MONTREAL SEE GROWTH BUT REMAIN RELATIVELY AFFORDABLE
Although Alberta is reporting the most growth in average listed rent prices year-over-year, it remains one of the more affordable Canadian provinces, particularly when looking at rental prices for apartments and condominiums.
Because of its relative affordability, the province is likely seeing demand that stems from interprovincial migration, with residents moving out of more expensive cities, such as Vancouver and Toronto, and into more affordable ones, such as Calgary, Ladas said.
This trend is also being observed in Montreal, he said. In August, the average price of a one-bedroom unit in Montreal rose 15.8 per cent, while the average cost of a two-bedroom unit increased 15 per cent. Despite these increases, average prices remain lower than those reported in either Toronto or Vancouver, at $1,769 for a one-bedroom unit and $2,237 for a two-bedroom unit.
Mid-sized markets located outside of major urban hubs, such as Burnaby, B.C., and Oakville, Ont., are also seeing strong increases in rent prices year-over-year as people aim to move farther away from city cores in search of lower average prices, said Ladas.
On the lower end of the national ranking are a number of cities in Prairie provinces, such as Edmonton, Winnipeg and Saskatoon, where the average price of a one-bedroom unit stands at $1,055.
INTEREST RATES AND AFFORDABILITY
In addition to more supply, lower interest rates may have an important role to play in tackling high rent prices, Iorwerth said. Elevated interest rates may hold back the production of new structures as developers struggle to pay off loans, ultimately limiting the amount of new supply that can enter the market, he said.
The federal government recently announced it would be removing GST on the construction of new rental apartment buildings, a promise the Liberals initially made during the 2015 election. But according to some experts, this move may not be the “silver bullet” Canadians are looking for to solve the issue of housing affordability.
CTVNews.ca has compiled a list of rental units currently on the market in major Canadian cities, as well as average rental prices according to Rentals.ca.
VANCOUVER
(Amir Miri)
Type: Apartment
Price: $3,950 per month
Year Built: 2005
Property Size: 74.32 sq. m
Average price for a two-bedroom unit: $3,879 per month
Located in downtown Vancouver, this rental unit is within walking distance of coffee shops, restaurants and more. Along with two bedrooms and two bathrooms, the unit’s open-concept layout also features a combined living, dining and kitchen area, as well as in-suite laundry.
TORONTO
(Yash Jailall / Frank Lardi, Re/Max Condos Plus Corporation)
Type: Apartment
Price: $2,350 per month
Year Built: 2013
Property Size: 44.6 sq. m
Average price for a one-bedroom unit: $2,620 per month
Hardwood floors and exposed concrete ceilings run throughout this one-bedroom, one-bathroom unit in Toronto’s King West neighbourhood. The apartment features floor-to-ceiling windows that lead to a balcony, as well as in-suite laundry. Within walking distance are restaurants, parks and access to public transit.
BURNABY, B.C.
(London House Photography / Patricia Verge, Royal LePage Team Realty)
Type: Apartment
Price: $2,495 per month
Year Built: 2017
Property Size: 51.1 sq. m
Average price for a one-bedroom unit: $2,555 per month
This apartment in Burnaby, B.C. has one bedroom and one bathroom, as well as a private balcony with southeast exposure. Laminate flooring can be found across most of the unit, including the bedroom, which has two closets. Building amenities include a rooftop terrace, gym and hot tub.
OTTAWA
(London House Photography / Patricia Verge, Royal LePage Team Realty)
Type: Apartment
Price: $1,950 per month
Year Built: 2011
Property Size: 48.9 sq. m
Average price for a one-bedroom unit: $2,058 per month
Located in Ottawa’s ByWard Market, this corner apartment unit has one bathroom and two bedrooms. The open-concept layout includes a combined living and dining area, along with in-suite laundry. Recent updates include the addition of new cabinetry, a tiled backsplash and granite countertops in the kitchen.
HALIFAX
(MetCap Living Management Inc.)
Type: Apartment
Price: $1,937 per month
Year Built: 1969
Property Size: 69.4 sq. m
Average price for a one-bedroom unit: $1,909 per month
With nearly 70 square metres of living space, this apartment in Halifax includes one bedroom and one bathroom. The unit comes equipped with stainless steel appliances and also includes a private balcony. Near the property are restaurants, grocery stores and access to public transit.
MONTREAL
(Elena Goranitis / Bianca Gentile, Re/Mac Action Inc.)
Type: Apartment
Price: $1,800 per month
Year Built: 2008
Property Size: 53.2 sq. m
Average price for a two-bedroom unit: $1,769 per month
This apartment unit in Old Montreal features exposed concrete columns and a high ceiling. In addition to one bedroom and one bathroom is an open-concept living, dining and kitchen area, which includes a breakfast bar. Large windows throughout the unit allow for plenty of natural light.
CALGARY
(QuadReal Property Group)
Type: Apartment
Price: $1,816 to $2,448 per month
Year Built: 1970
Property Size: 45.7 sq. m
Average price for a one-bedroom unit: $1,728 per month
Along with an open-concept living, dining and kitchen area, this rental unit in downtown Calgary has a balcony and wood-style flooring throughout. The one-bedroom, one-bathroom apartment is located near public transportation, and an outdoor pool and tennis court are among the amenities.
EDMONTON
(Rohit Group of Companies)
Type: Apartment
Price: $1,750 to $1,900 per month
Year Built: 2021
Property Size: 75.4 to 87.2 sq. m
Average price for a two-bedroom unit: $1,578 per month
Located east of Edmonton’s downtown core, this two-bedroom, one-bathroom unit offers easy access to public transportation, universities and more. Along with air conditioning, the unit includes in-suite laundry and pantries for additional storage space. Building amenities include a rooftop fitness centre and barbecue decks.
WINNIPEG
(Skyline Living)
Type: Apartment
Price: $1,745 per month
Year Built: Post-2010
Property Size: 80.92 sq. m
Average price for a two-bedroom unit: $1,644 per month
This rental unit in northwest Winnipeg has two bedrooms and two bathrooms, in addition to a private balcony. Other features include air conditioning, as well as granite countertops and stainless steel appliances in the kitchen.
REGINA
(Avenue Living Communities)
Type: Apartment
Price: $955 to $1,080 per month
Year Built: 1925
Property Size: 37.6 sq. m
Average price for a one-bedroom unit: $1,121 per month
This one-bedroom apartment is located near the heart of downtown Regina, and features a four-piece bathroom as well as an open-concept living room with large windows. The unit is part of a two-storey, pet-friendly building that also includes laundry facilities. Within walking distance are a number of parks, restaurants and schools.
SASKATOON
(Prokey Living)
Type: Apartment
Price: $1,350 per month
Year Renovated: 2022
Property Size: 77.85 sq. m
Average price for a two-bedroom unit: $1,241 per month
Recently renovated, this apartment in Saskatoon has new appliances and flooring throughout. Along with two bedrooms and one bathroom, the layout also includes a combined living and kitchen area as well as a balcony and in-suite laundry. The pet-friendly property is located near parks and community centres.
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