As More Newcomers Arrive, Rents in Canada Continue to Soar

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Newcomers to Canada and international students continue to face steadily rising rent prices across the country. 

In August, the national average rent for all property types rose 11.1 percent year over year to $1,959 surpassing by $5 the record set in 2019.  

Competition for rental units tightens

The August average was also up 16.8 percent since hitting a low point in April 2021, according to the latest National Rent Report by Rentals.ca and Bullpen Research & Consulting,

This report comes out as competition for rentals tightens across the country, particularly in Gateway cities such as Toronto, Vancouver and Calgary, popular destinations with arriving immigrants and students.

Canada is currently on track to meet or exceed its target of 431,645 new immigrants in 2022 which will certainly increase competition for rentals. 

Meanwhile, in five Canadian cities ( London (+26.5 percent), Calgary, (+24.7 percent), Vancouver (+24.4 percent), Toronto (+24.2 percent), and Hamilton (+21percent) average rents rose grew more than 20 percent. Mississauga and Brampton, popular landing spots for newcomers, had rental hikes of 16.2 percent and 13.4 percent respectively. 

Demand has shifted dramatically to the rental market, which is significantly undersupplied in many major Canadian municipalities - Ben Myers, Bullpen Research & Consulting

Ben Myers, President of Bullpen Research & Consulting, pointed out that “on a national level, average rents in August topped the pre-pandemic record high from the fall of 2019, with prospective tenants looking at properties that are $200 more expensive on average than a year earlier." 

Rental demand in Canada is on the rise

Myers also noted that "with several economists calling for an extended ownership housing market correction, demand has shifted dramatically to the rental market, which is significantly undersupplied in many major Canadian municipalities."

According to Myers, Rentals.ca pageview data indicates that rental demand is up by almost 40 percent from last August nationwide, and 70 percent from the COVID19 August 2020 market. 

The Gateway cities of Toronto and Vancouver continued to have the highest monthly rents among the National Rent Rankings of 35 cities, 

Vancouver ranked No. 1 for the highest average monthly rent for one- and two-bedroom units ($2,574 and $3,694) while Toronto came in second at a  $2,329 average for a one-bedroom and $3,266 for a two-bedroom. Vancouver and Toronto also ranked first and second in the July rankings.

The cheapest rents are found in western Canada 

Right now, the top 10 most expensive cities in Canada for rent prices are all located in Ontario and British Columbia, according to the report.

If you're a newcomer worried about the cost of living and looking to save for a house, the cheapest cities for rent prices are mostly found in Western Canada.

Among Canada's major cities, Edmonton ($1,071), Regina ($1,036) and Saskatoon ($988) have the cheapest one-bedroom rent prices. Windsor ($1,283) remains the cheapest major Ontario city for one-bedroom rent prices while Surrey ($1,624) is the cheapest in B.C.

British Columbia ranks highest

Provincially, British Columbia scored the highest average monthly rental rate ($2,578 in August) which constitutes a year-over-year increase of 23.7 percent. Nova Scotia, an increasingly popular spot for domestic and immigrant renters,  registered the second-highest average ($2,380, up 43.4 percent year-over-year).

Ontario was next at  $2,367. That's up 15.7 percent year-over-year.

Condo rental prices continue to rise

For newcomers and international students looking at the condo rental market, prices continue to rise with no end in sight. 

The Toronto Star's Tess Kalinowski reported that the cost of renting a Toronto condo hit a record average of $2,806 in August. That's a 19.5 percent year-over-year increase equal to $458 a month.

Kalinowski noted that it was the 10th consecutive month that condo rents rose in the double digits year-over-year, rising 11.4 percent in the last three months alone, according to new information from Urbanation, a  development tracking market research firm.

Meanwhile,  David Aizikov writing for Rentsync (Canada's No. 1 provider of multifamily marketing solutions) says that based on Rentals.ca data, these are the cities which had the highest number of searches by those looking to move over the last 3 months:

Not surprisingly, Ontario was No. 1 as the most in-demand province.

"Toronto and Ottawa taking the top two spots, and representing twice the overall demand found in the remaining 3 markets," writes Aizikov. "These two cities saw the most diverse searches with many prospective renters located across the world; Toronto received the greatest number of searches from outside of the country."

Searches from the U.S. are No. 1 

Those international searches came primarily from the U.S., Mexico, South America, The Middle East, Africa, and South Asia. For Rentals.ca, these international searches comprise on average 20 percent of total searches (the vast majority of rental searches are launched by those living nearby and looking to relocate to the city). 

Aizikov advises property owners and managers to pay special attention to where their renters are coming from.

"With so many renters moving long distances to find opportunities, whether they be a change of pace, a new job, or a completely new life, this group can not be overlooked."

Immigration will continue to drive the rental market

Meanwhile, Farah Omran, housing economist for Scotiabank, says Canada's ongoing success in hitting immigration targets will definitely lead to more population growth and more demand for housing, both owned or rented. 

This, she said in her most recent monthly Housing Report, will put even more pressure on "an already heated rental market" because most newcomers rent during their first few years after arriving.

New data from Statistics Canada backs Omran's point: Canada’s renter population is growing at more than twice the rate of homeowners.

My advice would be to start looking for apartments as soon as you know you are moving to Canada - Adi Brar, Mainstreet

Adi Brar, Market Research and Advertising Manager for Mainstreet Equity Corp. says newcomers to Canada and international students should begin their rental searches as early as possible. 

"My advice would be to start looking for apartments as soon as you know you are moving to Canada," said Brar. "Don’t wait, because rental prices have been increasing steadily. Look into budget-friendly, transit-friendly housing options; living close to public transit can help you to avoid the expense of having to buy and maintain a vehicle. "

Check out inner-city housing options

Mainstreet is a Canadian-based real estate company headquartered in Calgary, Alberta, that provides apartments to renters in Western Canada.

Brar also advises newcomers to check out inner-city housing options that are immigrant-friendly and budget-friendly. "I highly recommend prospects look for options like these."

Writing in Storeys.ca, Howard Chai notes "while the amount of homeowners in Canada is growing at 8.4 percent, the renter population is growing at 21.5 percent, more than double the rate."

According to the StatsCan data, the cities with the highest renter population growth rate between 2011 and 2021 were Ontario and B.C. and included Kelowna, B.C.  (+54.1 percent),  Nanaimo, B.C.(+40.0 percent) and Barrie, Ont. (+47.7 percent), Oshawa, Ont.  (+41.1 percent), and Kitchener–Cambridge–Waterloo, Ont. (+40.9 percent).

A newly released Toronto GTA Rent Report by Rentals.ca and Bullpen Research & Consulting shows that rents in the GTA, the most popular landing spot in Canada for immigrants, are continuing to rise substantially "post" pandemic. 

Prospective tenants are seeing limited vacancies due to an extreme imbalance between supply and demand - Ben Myers, Bullpen

"In April 2021, when rent hit a low of $1,972 per month, the trend reversed, and rental rates began increasing," writes Bullpen president Myers.  "In August 2021, the average rental rate in the GTA was $2,098 per month (refer to the chart below, which shows the average rent in blue and the monthly changes via the red bars).

The report shows that in August 2022, the average rent was up 2.7 percent month over month and 21 percent annually to $2,528 per month. "GTA rents have increased by 2 percent or more in each of the last four months after reaching a multi-year high of 5.7 percent in May," said Myers. 

Rental demand in the GTA will escalate

With future rent hikes in the GTA practically inevitable, rental demand will continue to escalate into the foreseeable future, the report says. 

"Prospective tenants," said Myers, "are seeing limited vacancies due to an extreme imbalance between supply and demand

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