Apartment Rents Keep Rising in Canada

Average monthly rents in Canada continue to rise with no signs of slowing down, especially in the most-expensive market—Vancouver and Toronto—where annual rent growth has surged YTD at about 24% in each city.

One-bedroom apartments are averaging nearly $2,000/month in Vancouver and Toronto, in US dollars. Nationally, the average rent for a one-bedroom is about $1,700, according to the latest National Rent Report from Rentals.ca and Urbanation.

“Rents in Canada are rising at an exceptionally high speed, which is having a profound effect on housing affordability as interest rates continue to rise,” said Shaun Hildebrand, president of Urbanation, in the report.

“With the most expensive cities experiencing very low supply and the fastest rates of rent increase, regions with high population growth are seeing demand shift into more affordable areas,” Hilldebrand said.

Montreal, Canada’s largest rental market, had the slowest annual rent increase among major metros at 7.6%, with rents that have become comparable to Calgary at an average of $1,150 for one-bedrooms.

Among medium-sized markets, purpose-built and condominium rents rose the highest YOY in several GTA cities and areas, including Brampton (up 28% YOY), North York (up 25.8%), Etobicoke (up 24.5%), Scarborough (up 22.9%) and Mississauga (up 19.2%).

Outside of Ontario, the fastest growing medium-sized municipalities were Halifax (up 24.2%) and Burnaby (up 23.6%). Rents grew by 17% to 19% in Barrie, Hamilton, Lethbridge, and Surrey.

Last month, the National Rent Report noted that the average YOY increase in Canada in October—11.8%—more than doubled the annual hourly wage increase of employees at 5.6%.

The monthly survey, which tracks rentals, reported that unprecedented rent growth is actually getting hotter with each interest rate increase.

“The unprecedented growth in rents underway is broad-based across Canada, with most markets reporting double-digit annual rent inflation,” Hildebrand said, in the report.

“The rental market keeps getting hotter with each interest rate increase, coupled with a record high increase in the population. The need to ram up rental supply has never been greater,” he said.

According to a report from the Canadian Real Estate Association (CREA), the average rent has surged 9.2% while benchmark resale prices have declined 9.9% since March—when Canada’s central bank started raising interest rates.

At the beginning of this month, the Bank of Canada issued its seventh consecutive rate hike, a 50 bps increase, while one of the bank’s governors hinted that a pivot is approaching.

“We’ve gone from a world where we were trying to decide how much each policy increase needed to be, to a world where we’re now asking the question of if we need to be increasing the policy rate,” said Bank of Canada Deputy Governor Sharon Kozicki, according to a report in the Toronto Star.

Kozicki said future decisions on rates will depend on a range of data, including consumer demand, business activity and inflation. The newspaper characterized her comments as a “significant shift in tone.”