Asking rents for all residential property types in Canada have increased by 9 per cent in 2023 according to Rentals.ca and Urbanation’s latest National Rent Report.
According to the report, the average asking rent reached a record high of $2,178 in December 2023, which showcased an 8.6 per cent increase from the same period in 2022.
The report noted that over the past two years, asking rents in Canada saw a 22 per cent increase, which represents an average monthly increase of $390. The 8.6 per cent year-over-year increase in 2023 follows a 12.1 per cent increase in 2022 and a 4.6 per cent rise in 2021.
“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,” said Shaun Hildebrand, president of Urbanation. “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.”
According to the report, traditional purpose-built rental apartments reached an average asking rent of $2,076, and experienced the fastest growth in 2023, at a 12.8 per cent increase. Condominium rentals and house rentals, however, saw slower annual growth rates of 6.9 per cent and 5.9 per cent, with average rents of $2,340 and $2,354 as of December.
Last year, one-bedroom apartment rents grew by 13 per cent and reached an average of $1,932. Studio rents had an 11.9 per cent increase, averaging $1,552 in December. Two-bedroom apartments saw a 9.8 per cent annual increase to an average of $2,301 and three-bedroom rents rose by 9.9 per cent to reach an average of $2,579.
Alberta was the province with the fastest-growing rents for purpose-built and condominium apartments in 2023, and recorded a 15.6 per cent annual increase to reach an average of $1,691.
British Columbia was still the most expensive province for apartment rents, while Ontario recorded a 3.7 per cent annual increase, with average apartment rents a bit lower than B.C. at $2,446.
The report noted that Quebec experienced faster rent growth for apartments in 2023 compared to 2022, with average rents rising 10.0 per cent to $1,953 in December.
Calgary had the fastest annual rent growth for apartments in December, while Edmonton followed with a 13.5 per cent annual rent growth. Montreal came in third in 2023 with an 11.3 per cent annual rent growth.
According to the report, both Vancouver and Toronto experienced a slowdown in rent growth in 2023. Vancouver’s average asking rents decreased by 0.7 per cent annually to $3,059 and Toronto’s asking rents for apartments increased by 2.1 per cent from a year ago to an average of $2,832.
The rental market in Canada is expected to remain undersupplied but is anticipated to reach somewhat of a balance. The report noted that rent growth is predicted to converge towards the five-year average increase of approximately 5 per cent.
While factors such as a slowing economy, a reduction in the number of non-permanent residents, and an improvement in homebuying activity will affect the rental market in 2024, the introduction of additional apartment completions and an anticipated increase in tenant turnover, however, are expected to add more supply to it.