RENT IS INFLATIONARY

Asking rents jump 8.6% in December to hit record $2,178 on average: report

The Canadian Press

A new report says the average asking price in December for a rental unit in Canada was a record $2,178 per month, relatively flat from the previous month but an 8.6 per cent jump year-over-year.

The data released Monday by Rentals.ca and Urbanation, which analyzes monthly listings from the former's network, showed the average monthly cost of a one-bedroom unit in December was $1,932, up 12.7 per cent from the same month in 2022.

The average asking price for a two-bedroom was $2,301, up 9.8 per cent annually.

Rents also increased by an average of 8.6 per cent for 2023 as a whole. This followed a 12.1 per cent increase in 2022 and a 4.6 per cent gain in 2021. Asking rents in Canada over the past two years have increased overall by a total of 22 per cent, or an average of $390 per month, according to the report.

Traditional purpose-built rental apartments posted the fastest price growth in 2023 with a 12.8 per cent increase, as rents averaged $2,076. Condominium rentals, with an average rent of $2,340, and home rentals, at $2,354, had slower annual growth of 6.9 per cent and 5.9 per cent, respectively.

Asking rents in December for a one-bedroom unit in Canada's two most expensive major cities, Vancouver and Toronto, continued to come down on monthly basis.

The west coast city had an average price of $2,700, which was 5.8 per cent lower than November, while the Ontario capital came in at $2,521, 2.8 per cent below the previous month. Despite that, the cities still marked increases on an annual basis of four per cent and 2.6 per cent, respectively.

Alberta had the fastest-growing rents among provinces for purpose-built and condominium apartments in 2023, with a 15.6 per cent annual increase in December to reach an average of $1,691.

Meanwhile, B.C. remained the most expensive province for apartment rents with an average asking rent of $2,500, despite a 1.4 per cent annual decrease. The average apartment rent in Ontario was slightly below at $2,446, increasing 3.7 per cent annually in December.

The report said the rental market in Canada will remain undersupplied in 2024, but there should be more balance, with rent growth expected to be closer to its five-year average of approximately five per cent.

"Rental demand is expected to remain strong, experiencing some moderation compared to 2023 due to a slowing economy, a reduced number of non-permanent residents, and an improvement in homebuying activity as interest rates begin to decline," it stated.

This report by The Canadian Press was first published Jan. 15, 2024.

Interest rate shifts will have little impact on rental costs: expert

Ben Cousins, BNN Bloomberg

a "for rent" sign is posted outside a home in Denver. U.S. home rental prices , The Canadian Press

A Canadian real estate expert believes renters will see little benefit to changes in Canada’s interest rates, even as rental prices across the country see sky-high increases.

A report from Rentals.ca and Urbanation, released on Monday, found the average asking price for a rental in December climbed 8.6 per cent year-over-year, to a record $2,178 per month.

Additionally, asking prices for a one-bedroom unit climbed 12.7 per cent on an annual basis to $1,932.

 “When you look at the last two-year period, rents have grown by about 22 per cent,” Shaun Hildebrand, president of Urbanation, told BNN Bloomberg in a television interview on Tuesday. “This just speaks to how strong rental demand is across the country right now.”

 “This is obviously much faster than income growth and it’s causing a real deterioration of rental affordability across the country.”

 While many economists believe rental prices could stabilize once the Bank of Canada brings interest rates down – expected later this year -- Hildebrand isn’t so convinced.

 “We’ve been underbuilding rental housing for decades, so there’s not going to be a whole lot of change, unfortunately,” he said. 

Hildebrand said lower interest rates may push renters into homeownership and other measures, such as the cap on foreign students, may help with rental supply. However, he added the overall impact of the measures will be muted. 

“That should take a little bit of steam out of the market, but still we’re expecting to see rent growth in the five per cent range for the country, which is bringing things back in line with the five-year average,” he said.

Hildebrand pointed to three factors hurting rental prices in the country: record population growth, soft real estate activity and a stable economy.

RENT HIKES SEEN OUTSIDE OF TORONTO, VANCOUVER

While rent prices saw increases of nearly 10 per cent nationally, Canada’s two biggest cities, Toronto and Vancouver, actually saw rent prices decline.

Vancouver saw average rent decline by 5.8 per cent in December compared to a month prior, while Toronto’s declined by 2.8 per cent in the same time frame.  

Meanwhile, cities that saw significant population growth, such as Calgary and Halifax, took the brunt of the rent price hikes.

“I think this speaks to some resistance in the market to how expensive rents have become and there’s been some outward migration from these big expensive cities into relatively more affordable markets,” Hildebrand said.