The average rents in Canada are expected to continue their upswing this year, with Toronto leading the growth, according to the latest market forecast by Rentals.ca and Bullpen Research and Consulting.
Renters will have to brace for an average 3% increase in housing costs this year. Those in Toronto will need to prepare for a stronger 7% increase in rents.
Housing Market News Alerts
Sign up now for news alerts on the Canadian housing market.
You have Successfully Subscribed!
Montreal, Ottawa, and Vancouver are also expected to witness a spike in rents by around 3% to 5%. On the other hand, rents are projected to decline by 1% in Calgary and Edmonton.
Also Read: Toronto condos are becoming less affordable for first-time homebuyers
“The impact of the changes to the mortgage stress test have started to fade as developers and investors look to increase rental supply to offset the increase in rental demand brought on by the decrease in mortgage credit and the spike in population over the past two years,” said Ben Myers, president of Bullpen Research and Consulting.
The average rent for Canadian properties in November 2019 was $1,918, up 9.4% annually but down 1.1% monthly. The median rental rate was $1,850 per month, a 15.6% jump from a year earlier.
The growth in rents over the past year was not consistent across built forms and bedroom types.
Also Read: Toronto home sales jump 17.4% in December; prices rise
“The data shows two-bedroom units have experienced the highest annual growth at 17%, followed by one-bedroom and five-bedroom units at 11%, and three-bedroom units at 10%,” Myers said.
Amongst property types, single-family homes experienced the highest annual price growth at 10.3%, followed by townhomes at 10.3% and rental apartments at 8.2%. Condominium apartments also posted an increase in rents, albeit at a slower rate of 2.6%.
“Basement apartments declined year-over-year, but the sample size is small, and the results are not likely an indication of a big drop in demand for this property type,” Myers said.
Also Read: Canadian homebuyers shouldn?t expect interest rates to rise until late 2021
Myers said the increase in rents on an annual basis was supported by some of the smaller municipalities such as London, Hamilton, Kanata, Burlington, and Kitchener, which are all experiencing double-digit rent growth when considering all property types.
Over the next year, the growth in rents will be supported by the increasing demand from several Canadians who are increasingly finding it more convenient to rent for various reasons.
“Developers are looking to cater to more affluent renters, including those shut out of the ownership market by increasing prices, younger renters choosing to be tenants for lifestyle reasons, and boomers and empty-nesters trading down from a larger dwelling,” Myers said.
Also Read: How will changes to Ontario’s REBBA affect the province’s investors?
However, this year’s growth could be more muted due to the expected increase in supply.