Canadian Rental Market Shifts Toward Renters

For newcomers to Canada and international students looking for housing, the country's rental property market continues to shift in favour of renters.

According to a new report from Rentsync, rental demand in Canada fell for the second straight month in September.

In fact, the report shows that rental demand has been declining since peaking earlier in March (interrupted only by a one-off rebound in July).

The Rentsync report comes on the heels of the latest monthly national rent price report from Rentals.ca and Urbanation.

 

That report showed that average asking rents across Canada increased just 2.1 percent in September, down from 3.3 percent in August.

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Asking rents in Brampton rose slightly in September

That's the lowest rent price growth rate since October 2021.

According to the Rentals.ca report, September is the fifth straight month that Canada's annual rent price growth rate has slowed.

The average asking rent nationally in September was $2,193. In August, it was $2,187.

The average asking rent for a one-bedroom unit in Canada in September was $1,916, up 2.1 percent from a year ago.

Meanwhile, the average asking price nationally for a two-bedroom unit in September was $2,279, an increase of 2.6 percent from the same month in 2023

 

Rents are rising at their slowest pace in 3 years

Urbanation president Shaun Hildebrand said, "rents in Canada are increasing at their slowest pace in nearly three years, largely the result of foreign student enrolments dropping by roughly a half from their record highs, with the impact felt most in B.C. and Ontario."

Ontario and B.C. had the most significant annual rent declines in the Rentals.ca report.

In early 2024, the Canadian government capped international student permits, partly hoping to ease the rental housing crisis.

Canadian housing expert Dr.Mike Moffat says, "Rents are down 4 percent this year in Ontario, and the highest drops are in college towns."

 

Moffatt said that the federal (international) student reforms are bringing balance back to the student housing market and "are working well."

Still, despite the slowdown in rent price increases, average rents in Canada are 13.4 percent higher than two years ago and 25.2 percent higher than three years ago.

And while rent price increases are falling in the larger Canadian cities, smaller and more affordable markets such as Saskatoon and St. Catharines are seeing rising rents as people seek cheaper options nationally.

Landlords will need to compete

What does this all mean for immigrants looking to rent in Canada?

David Aizikov, the author of the Rentsync Demand Report, says, "It is clear that the Canadian rental market will remain firmly a renters market" for the foreseeable future.  

The Demand Report also predicts landlord competition for tenants will increase as the number of people actively looking for a rental continues declining. 

 

11 Rentals.ca Report highs and lows:

 

1. HIGHEST - Vancouver, BC $2,649
2. THE CHEAPEST – Fort McMurray, Alberta $1,240
3. SECOND CHEAPEST – Saskatoon, Sask. $1,313
4. IN THE MIDDLE – Oshawa $1,865 and Nanaimo $1,855
5. STILL HIGH DEMAND – Toronto $2,402
6. AFFORDABLE BIG - Montreal, QC $1,725.
7. PRAIRIE HIGH - Calgary, AB $1,692
8. CHEAPER OPTION – Edmonton, AB $1,408
9. STABLE MARKET - Winnipeg, MB $1,421
10. ONTARIO'S BEST DEAL – Windsor, $1,561
11. RISING FAST – Halifax, NS $1,998

 

However, record-low vacancy rates in many cities remain an issue for newcomers and international students looking for a home. Rentsync's Azimov points out that a lack of rental affordability has meant "declining turnover rates, lowered mobility, further limitations on supply, and worsening of affordability."

Renters who might now be looking to buy a home have stayed put as they wait for interest rates and home prices to fall.

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The Bank of Canada has lowered its interest rate three times to 4.25 percent in 2024, and more cuts are expected this year and into 2025. How much this will motivate current renters hoping to buy remains to be seen, but housing experts are optimistic.

Canada is also encouraging the building of new rental housing, but this takes years and depends on financial conditions, including interest rates and inflation. 

 

Other rental report highlights:

• Ontario's average asking rent for purpose-built and condo apartments fell 4.3 percent to $2,380. B.C. saw a 3.2 percent decline to $2,570.
• Saskatchewan led the country in rent growth, with a 23.5 percent increase. It's the fastest-growing province in terms of rental prices.
• Apartment rents in Vancouver, Toronto, Calgary, and Montreal saw declines.
• Rents for shared accommodations nationally increased by 6.9 percent year-over-year.
• Average rent in B.C. remains the highest of all Canadian provinces.
• Overall, asking rents for purpose-built rental apartments in September rose 5.4 percent compared with September 2023 to reach an average of $2,138.
• Condominium apartment rents averaged $2,296 and were down 1.7 percent year-over-year.
• A one-bedroom in Surrey, B.C., was $2,120, down 0.2 percent from August
• A one-bedroom in Brampton, Ontario, was $2,060, down 0.7 percent from the previous month

 

The long-term rental outlook for newcomers

So, what kind of rental market are newcomers and international students facing heading into 2025?

Numerous housing experts predict that long-term high demand will define Canada's rental market.

Max Steinman, CEO of Rentsync, predicts, "There's going to continue to be a huge demand for renting, probably even a growing demand over time."

That demand, says the Canada Mortgage and Housing Corporation (CMHC), may mean higher rent prices and increased affordability issues in some markets.

 

Increased rental demand from immigration

CMHC says the high demand for rentals is expected to come from population growth via immigration and slower rental housing development.

Canada remains on track to admit 450,000 permanent resident immigrants this year, mainly from India, the Philippines and China.  That number does not include international students, temporary foreign workers or refugees.

 

Summary for newcomers: 

With inflation and interest rates falling, Canadian rent prices will likely continue falling in big cities but rise in some mid-sized and smaller centres.

The affordability search will remain a key motivator for renters.

Whether you're looking to rent or buy in Canada, it's essential to stay current about Canadian housing trends and be proactive.

Pay attention to interest rates and inflation, as these impact housing.

Also, understand the regional differences regarding rental prices and rental demand in Canada so you can choose your new home wisely and make the right decision for your housing and career needs.

As rental supply struggles to meet demand, newcomers and international students must do their city research before they arrive in Canada.

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Rental Action Plan for Newcomers:

• Follow Rentals for Newcomers for the latest rental trends in Canada.
• Be sure to do your research BEFORE arriving in Canada.
• Consider using a real estate agent to help you find a rental.
• Look for landlords and property owners offering incentives.
• Investigate the benefits of becoming a housemate in a home-sharing program.

 

Sources:

Rentals.ca, Rentsync, Boardwalk, Canadian Press

Steve Tustin is the Content Editor for Rentals for Newcomers and a contributing editor for Prepare for Canada. He is also the former managing editor of Storeys.com and a former senior editor at the Globe and Mail and the Toronto Star.

*No AI-generated content was used in the writing of this story, and all sources are cited and credited where possible.

© Rentals for Newcomers 2024