July sees unprecedented spike in average Canadian rental unit asking prices: report

  8/12/2023 |   SHARE
Posted in Rental Market by Vanguard Realty | Back to Main Blog Page

Amidst continued interest rate hikes and economic challenges, the average asking price for a rental unit in Canada reached another new record of $2,078 in July, according to the latest rental report by Rentals.ca. and Urbanation

This increase comes just after setting a new high record in June. The 1.8 per cent increase in average asking rents over June represented the fastest month-over-month growth of the past eight months.

According to the report published on Thursday, July marked the fastest pace of growth of the past three months, witnessing an 8.9 per cent annual increase in rents. 

As per the report, the average asking rents in Canada have increased by 21 per cent when compared to the same period in 2021, resulting in an average additional expense of $354 per month.

"I wouldn't be at all surprised if the average asking rents next year in Ontario jumped to $3,500," said Douglas Kwan, the director of advocacy and legal services at the Advocacy Centre for Tenants Ontario, which defends tenant rights.

"There really doesn't seem to be any sign that this crisis is going to be abated or lessened."

Kwan routinely sees tenants shocked by the rent increases their landlords are proposing or the figures they see on ads. In one instance, a family of Syrian refugees began renting a home in Waterloo, Ont., for $2,000 a month. Their landlord approached them a year later seeking almost $4,000 a month instead.

"We're also hearing stories of people coming from all across Canada, some who sold their property to move to eastern Ontario (in a new building advertised as affordable), hoping to find a place to retire that was affordable," Kwan said.

"Well, they moved in there and they found out that their building was rent control exempt but found their rents would go up 20 per cent the following year."

While there are many factors, including a lack of affordable housing, pushing up asking rents, Rentals.ca and Urbanation attributed the July riseto a surge in post-secondary students signing leases before the fall, unprecedented levels of population growth and homebuyers holding off on purchases as interest rates have risen.

"Canada's rental market is currently facing a perfect storm of factors driving rents to new highs," said Shaun Hildebrand, president of Urbanation, in a news release.

"These include the peak season for lease activity, an open border policy for new residents, quickly rising incomes, and the worst ever home ownership affordability conditions."

Realtors have reported some prospective buyers have stayed out of the housing market for the bulk of the year after being spooked by a succession of interest rate hikes that ate into their buying power.

The average price of a home reached $709,218 in June, up 6.7 per cent from a year earlier, the Canadian Real Estate Association said last month. On a seasonally-adjusted basis, it was $709,103, down 0.7 per cent from a year prior.

The organization believes the national average home price will edge down 0.2 per cent from 2022 to $702,409 this year before rising to $723,243 in 2024.

Such prices are keeping aspiring buyers in the rental market, but they're not seeing much relief there either.

July marked a significant milestone as the average asking rents for purpose-built condominiums and apartments. Average rents for these units surpassed $2,000 for the first time, reaching $2,008, according to the report. 

One-bedroom apartments lead the way with a 13 per cent annual rise and 2.5 per cent monthly increase, resulting in an average of $1,850. 

Two-bedroom units commanded an average rent of $2,191, while three-bedroom units reached a slightly higher average of $2,413. On the more affordable end, studios had an average rent of $1,445. 

Breaking down the data on region-wise, Calgary’s rental market continued to have the fastest rent increase among Canada’s big cities with a 16.1 per cent year-over-year increase in apartment rental prices. Average rents in the city reached $2,036, although the growth slowed down a bit from the 18.4 per cent growth in June.

Montreal also saw a big jump, with rent growth going from 11.2 per cent to 5.3 per cent in July. This brought the average rent in the city to $1,987.

When it comes to Greater Montreal, it stood out as one of the top five mid-sized markets with rapidly increasing rents. In Laval, there was a 28.5 per cent year-over-year growth, reaching $2,011 in rent while Cote Saint-Luc was a 23 per cent increase, reaching $2,306.

Other big cities such as Toronto and Vancouver witnessed a slower rate of annual rent growth in July with 11.5 per cent and 12.2 per cent increase in average asking rents, respectively. With no surprise that Vancouver maintained the highest average rent among the largest market at $3,340, showing a 2.9 per cent monthly increase.

Moving to British Columbia, Richmond and New Westminster showed the fastest annual growth rates with 27 per cent and 20.7 per cent respectively.

In Ontario, Brampton, and Scarborough in the Greater Toronto Area experienced significant rent growth with the average rents for apartment went up by 18.6 per cent in Brampton and 18.2 per cent in Scarborough.

The report also highlights a rise in asking rents for shared roommate accommodation across several provinces. Last year, B.C., Alberta, Ontario, and Quebec collectively saw an average growth of 16.1 per cent, bringing average roommate rents to $971.

Quebec had the quickest yearly increase at 23.8 per cent, with an average of $901, while B.C. achieved a 20.4 per cent rise, averaging $1,163. Alberta's roommate rents went up by 14.4 per cent to reach $810, and Ontario experienced a 7.1 per cent growth, resulting in an average of $1,009.

According to the report, Vancouver and Toronto held the leading positions for average asking rents in roommate rentals, with average rents of $1,455 and $1,296 respectively. 

This report by The Canadian Press was first published Aug. 11, 2023.

Source: CTV

Canada Real Estate, Ontario Rental Market, Toronto Rental Market