For Newcomers to Canada the Rental Housing Shortage Will Continue
For newcomers to Canada and international students arriving in 2024, two key accommodation trends loom: Alberta will again experience above-average rent increases and Ontario and British Columbia - popular destinations for immigrants - will continue to see below-average rent price growth.
Plus, according to the January 2024 Rental Report from Rentals.ca and Urbanation, the country’s rental market will continue to be under-supplied.
“Rental demand is expected to remain strong, experiencing some moderation compared to 2023 due to a slowing economy, a reduced number of non-permanent residents, and an improvement in homebuying activity as interest rates begin to decline,” the report says.
Rent growth in 2023 was stronger than expected
This latest report reveals that average asking rents for all residential property types in Canada hit a record high of $2,178 at the end of 2023, an increase of 8.6 percent from the end of 2022 when the asking rent was $2,005.
In just two years, asking rents in Canada have increased by a total of 22 percent. That's an average of $390 per month.
RELATED STORY: Our latest Housing Newsletter for Newcomers to Canada and International Students
This past year's 8.6 percent increase in rent comes on the heels of a 12.1 percent increase in 2022 and a 4.6 percent increase in 2021.
The latest five-year average annual increase in rent was 4.9 percent.
According to Shaun Hildebrand, President of Urbanation, "the rate of rent growth in Canada was stronger than expected in 2023, mainly due to a surge in non-permanent residents, a resilient economy, and a sharp pullback in home buying activity.”
“While rents are expected to continue rising in 2024, there should be less upward pressure on the market this year as demand increases at a somewhat slower speed and more supply is added.”
Regarding its 2024 forecast for rent prices, Rentals.ca predicts this year will be "more balanced," and that the annual rent price growth will stick closer to its 5-year average of around 5 percent.
According to a recent story by Victoria Gibson in the Toronto Star, housing experts and analysts agree that the reality in 2024 is that while rent inflation has slowed in recent months, prices are still expected to rise by year’s end due to factors ranging from an undersupplied market to more would-be buyers priced out of ownership.
RELATED TOPIC:
Want to find out your Canadian credit score? Click here.
Writing in Rentsync's National Demand Report, author David Aizikov observes that "renter demand continues to trend downwards and will likely remain depressed until the weather improves next quarter. This will be especially prevalent in the most popular and competitive rental markets which saw strong annual rent growth throughout 2023 and are now seeing some of the greatest monthly declines in monthly unique prospects."
Immigration will continue to impact rental prices
Canada still plans to welcome 465,000 new immigrants in 2024, mainly from India, the Philippines and China.
In a move that might alleviate some pressure on the Canadian rental market, the federal government has placed a new cap on the number of international students to be admitted into the country as part of a package of reforms.
Immigration Minister Marc Miller introduced a plan to slash the number of new study permits issued across Canada this year by 35 percent from last year's level to 364,000. The number of applicants accepted in master's and doctoral programs remains uncapped.
Canada issued 579,075 new international study permits between January and November 2023, and there were approximately 900,000 international students in the country.
Describing the relationship between housing and immigration as complex, Miller has indicated that in addition to caps on international students, the government will examine controls on other non-permanent residents, chiefly temporary foreign workers, coming into Canada.
Canadians see value in temporary foreign workers
A recent Nanos Research poll reveals that most Canadians recognize the importance of temporary foreign workers to the economy.
All of this is happening as political discussions increasingly focus on the relationships between housing affordability and immigration.
Housing experts, however, caution that it's impossible to predict what impact these new restrictions will have on rent prices and vacancy rates.
However, Mike Moffatt, a housing expert and economics professor at Western University, recently told Nojoud Al Mallees of the Canadian Press that the mass influx of international students has strained the housing market.
The increase in temporary residents means thousands more people are competing for lower-cost rentals, and investors are buying up properties to convert into student housing, he told Al Mallees.
"It's good to see the federal government start to bring some rationality back to the number of international students," Moffatt said.
For newcomers and international students arriving this year, the Rentals.ca report shows that affordable markets, such as Alberta, will experience above-average rent increases throughout 2024, while the more expensive rental markets, including B.C. and Ontario, should see rent price increases that are below the national average.
The report predicts that Canada's rental market will most likely be under-supplied while rental demand remains strong with "some moderation compared to 2023 due to a slowing economy, a reduced number of non-permanent residents, and an improvement in homebuying activity as interest rates begin to decline."
The report also points out that more apartment completions plus more tenant turnover in 2024 “should add more supply to the market in the near term and help temper rent growth.”
According to the report, rent prices in Alberta once again saw the fastest year-over-year increase, up 15.6 percent to $1,691 in December. Quebec (up 10 percent) and Saskatchewan ( up 10 percent) also experienced significant rental price growth in 2024.
Meanwhile, December rent prices were lower in Nova Scotia, falling 2 percent. Rents also fell in British Columbia (-1.4%), but the Pacific Coast province is still Canada's most expensive rental market. The average asking rent in B.C. is $2,500.
Calgary rents continue to rise
While still featuring the cheapest mid-sized city rents in the country, numerous cities in Western Canada continued to see the quickest rate of rent price growth in December. For example, in Calgary, rents increased 14 percent year-over-year, with Edmonton close behind with rent increases of 13.5 percent.
Meanwhile, Canada’s most popular "Gateway Cities" (and most expensive markets) continued to experience a moderation in rent price growth. Asking rents rose only 2.1 percent in Toronto and were down 0.7 percent in Vancouver.
For newcomers and international students trying to decide which type of rental accommodation is right for them, the Rentals.ca report reveals that traditional purpose-built rental apartments were the most reasonably priced rental accommodations through 2023 (relative to condo and house rentals).
The report also shows that rents for two-bedroom apartments, popular with newcomers with families, "increased at a slower rate in 2023 compared with 2022, while all other unit types experienced faster rent growth in 2023."
Consider the relative costs of living (renting) carefully as these can vary substantially across the country – and more so than wages - Rebekah Young, Scotiabank economist
As we move deeper into 2024, Rentsync's Aizikov offers a hopeful outlook for landlords and newcomer renters.
"(This year) offers new hope for the Canadian rental industry, with more policy, more funding, and more attention than ever before, the industry as a whole can take greater strides towards a better future with more apartments, greater affordability, and a healthier outlook."
Vacancy rates remain historically low
The newly released 2024 Rental Housing Report from Canada Mortgage and Housing Corporation sees historically low vacancy rates and rent prices as an ongoing problem this year and one that won't be solved until the supply is increased.
“Again in 2023, strong rental demand continued to outpace supply in communities across the country,” writes Kevin Hughes, CMHC’s Deputy Chief Economist, “making it very difficult for renters to find housing they can afford.“
Hughes goes on to say, “The vacancy rates and rent increases we are observing are further evidence the current level of rental supply in Canada is vastly insufficient, and the need to increase this supply is urgent.”
Factor all costs when deciding where to settle
As to where newcomers to Canada and international students should choose to settle in terms of rent prices and jobs, Rebekah Young, head of Inclusion and Resilience Economics at Scotiabank, recently offered this advice for 2024:
"For someone planning a move to Canada, the best advice can be to consider the relative costs of living (renting) carefully as these can vary substantially across the country – and more so than wages."
*Rent prices were accurate when this article was published but may change over time.
Steve Tustin is the Editor for Rentals for Newcomers and contributing editor for Prepare for Canada. He is the former managing editor of Storeys.com and a former senior editor at both the Globe and Mail and the Toronto Star.
*Rentals for Newcomers used no AI-generated content in the writing of this story, and all sources are cited and credited where possible.
© Rentals for Newcomers 2024
