Canada’s average rental price keeps climbing

The Canadian rental market ended a red-hot 2022 on a high note, with little indication of slowing down. According to a National Rent Report by Rentals.ca and Urbanation, the average national rent remained above $2,000 for the second consecutive month in December. The report, which analyzed data from RentFaster.ca, revealed that the average rate of annual rent increase for the entire year was 10.9%. This marks the first year since 2019 when the national market experienced a positive yearly growth rate.

The report cites several reasons for this strong growth, including “a recovery from declines experienced during the pandemic, record-high population growth, a large pullback in home buying, and structurally low vacancy rates.”

Additionally, the report notes that despite a record-high number of apartment completions in 2022, the Canadian rental market still experienced one of its strongest years, which shows just how high the demand for rental properties is. Shaun Hildebrand, President of Urbanation, said the rental market looks set to remain strong in 2023, in December 2022, rents for purpose-built and condominium apartments observed the most growth, increasing by 10.7% year over year. Annual rental growth was also strong for two- bedroom units (up 10.6%) and one-bedroom units (up 9.1%), while studio and three- bedroom units increased by 6.9% and 6.2%, respectively.

The report noted a clear correlation between rental prices and population growth, noting that Nova Scotia and other Atlantic provinces had strong population growth and, therefore, also saw significant increases in their average rental price.

Among the municipal markets included in the report, Toronto and Vancouver remained the most expensive areas, with rates increasing by 22.7% and 21.2%, respectively. Calgary, which experienced strong economic growth, saw rent growth of 22.6%, placing it second on the list for rent growth. Meanwhile, Ottawa and Edmonton saw annual increases of 14.5% and 11.7%, respectively.

Montreal had the lowest annual rent growth of any large city, with only a 6.6% yearly increase. The rental growth in smaller markets outpaced the appreciation recorded in larger cities. Kitchener, Halifax, and London were among the smaller markets which saw their annual rent increasing more than 30% in December.

“Rental demand is primarily being driven by a quickly growing population that is finding it increasingly more difficult to afford homeownership or find suitable rental housing. Looking ahead for 2023, rents are expected to continue rising, but less heated growth can be expected as the economy slows and new rental supply rises to multi-decade highs.”