Canada’s rental market facing ‘perfect storm’ as prices hit new high in July: report

Canadian renters have long lamented the increasing prices they see landlords request of tenants, but in July, those totals hit a level unseen in the country’s history.

Data from Rentals.ca and research firm Urbanation released this week show July’s average asking rent hit $2,078, just shy of nine per cent above the same month last year.

The organizations behind the data said July’s numbers also constitute the fastest pace of growth over the past three months and add the average asking rent rose 1.8 per cent between June and July, the most rapid month-over-month increase in the last eight months.

Compared to July 2021, the average asking rent increased by 21 per cent, adding $354 per month on average.

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Rentals.ca and Urbanation attributed the rise to 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.

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“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.

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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 renters in the market, but they’re not seeing much relief there either.

For the first time ever, average asking rents for purpose-built condominiums and apartments rose above $2,000 in July, reaching $2,008, Rentals.ca and Urbanation’s research showed.

One-bedroom apartments alone saw a 13 per cent annual increase and a monthly rise of 2.5 per cent, bringing July’s figure to $1,850.

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The average asking rent for a two-bedroom unit sat at $2,191, followed by $2,413 for three-bedroom units. However, studios averaged $1,445.

Much of the growth in annual asking rents for purpose-built and condominium apartments came from Calgary, which retained its status as the region with the fastest rent growth among Canada’s largest markets.

Montreal also saw significant acceleration in asking rents, but most other markets grew at a slower rate than has been the norm lately.

The Rentals.ca and Urbanation report also detected a rise in asking rents for those seeking roommates. In B.C., Alberta, Ontario and Quebec, asking rent for such accommodations rose by an average 16 per cent over the past year to $971.

Vancouver and Toronto landed the top spots for average asking rents for roommate rentals, with rents at $1,455 and $1,296 respectively.