Overall, average rents in Canada declined slightly in March after three straight months of increasing rental rates, according to the April national rent report produced by Rentals.ca and Bullpen Research & Consulting.
While Vancouver remains Canada’s most expensive city to rent in—average rent for a two-bedroom apartment in March was $2,966 compared to $2,724 in Toronto—Toronto is the most active market for private landlords as investors purchase pre-construction condominium apartments and rent them out at completion.
Despite the record number of condominium units under construction last year, the number of condos completed in Toronto was not enough to keep up with demand.
Looking at the major cities, average rents in Toronto increased by 1.8 per cent in Q1-2019 over Q4-2018. Vancouver rents were down 2.7 per cent and Ottawa declined 0.5 per cent—however, the median rent in Ottawa increased by 2.6 per cent.
“The pace of rental growth subsided on a national basis last month, but monthly readings can result in some volatility,” said Matt Danison, CEO of Rentals.ca. “Data shows rents were up in most of the major provinces in Q1-2019, with Ontario up by 1.7 per cent quarterly, Alberta by 3.4 per cent, and BC by 8.7 per cent. Average rents declined by 3.5 per cent quarterly in Quebec.”
The average property on Rentals.ca was offered for $1,864 per month in March vs. $1,888 per month in February, a decrease of 1.3% month over month. The median asking rent in March of $1,750 per month is 2.7% lower than February ($1,800).
On a quarterly basis—first quarter 2019 over last quarter 2018—the average property listed on Rentals.ca increased by 4.3 per cent to $1,869, while median national rents were up 6.9 per cent quarter over quarter at $1,764.
Because of mixed economic signals, there won’t likely be any interest rate hikes in 2019 as previously forecast. In fact, there is a good chance of a rate reduction as the potential for a recession is now looming.
First-Time Home Buyers Incentive
A factor that could reduce rental demand is the new First-Time Home Buyers Incentive that was recently announced as part of the national budget. This interest-free down payment assistance program could help many tenants get into the home-ownership market.
According to the Canada Mortgage and Housing Corporation, “by helping first-time home buyers purchase homes, we will free up rental supply, easing pressure on rents. This, along with the expanded Rental Construction Financing program, will add to the supply of affordable rental housing.”
These two measures, plus the potential rate cut in 2019 should help keep rents stable if not lower, especially in Toronto where rents continue to increase on a monthly basis.
Other takeaways from the April rent report include:
- On a provincial level, Ontario had the highest rental rates in March, with landlords seeking $2,162 per month on average (all property types), a decrease of 1.6% from February ($2,197). In British Columbia, the average asking rent was $1,611 per month, an increase of 1.8% month over month.
- Asking rents in Alberta have increased in each of the last five months, with March’s $1,303 average rent increasing by nearly 1% over February. Also in Alberta, Calgary rents were down 1.7% quarterly, but Fort McMurrary was up 1.7%, and Edmonton was up 5.1%.
- Four of the 30 cities — London, Lethbridge, Quebec City and Windsor — have average monthly rents below $1,000 for a one-bedroom home.
“I don’t expect rents to grow as quickly in the second quarter as they did in the first, but further housing market interventions are not off the table, especially as they relate to alternative or subprime lenders,” said Ben Myers, president of Bullpen Research & Consulting. “A move to further tighten credit could send another flood of tenants into the already tight rental market.”
The National Rent Report charts and analyzes national, provincial and municipal monthly rental rates and market trends across all listings on Rentals.ca for Canada.