The average listed rent for all property types rose 12.2 per cent year over year in December to $2,005, an increase of $217 over the same month last year, according to the Rentals.ca and Urbanation latest National Rent Report.
Average rents in Canada have exceeded $2,000 for the second straight month. The average rate of annual rent increase for 2022 was 10.9 per cent.
This follows a 1.6 per cent average annual rent decline for both 2021 and 2020, resulting in a three-year average rent increase of 2.6 per cent — below the general rate of inflation over the same time period. (Reported rent increases reflect units that turned over in the market. The majority of rental units do not have an annual change in tenancy and are subject to provincial rent increase guidelines.)
The double-digit growth in rents last year can be attributed to a combination of factors, including:
- A recovery from declines experienced during the pandemic,
- Record high population growth
- A large pullback in home buying and
- Low vacancy rates
On a month-over-month basis, average rents decreased 1 per cent, which is a typical seasonal occurrence.
“The Canadian rental market had one of its strongest years ever in 2022, more than reversing any weakness experienced during the pandemic,” said Shaun Hildebrand, president of Urbanation. “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”
Average rents in Canada this year are expected to increase about 5 per cent, which is more aligned with current rates of income growth and the long-term historical average for rent inflation.
More moderate rent increases are expected in 2023 as the economy and employment begin to soften following the rapid rise in interest rates and as renters face affordability constraints after rents surged to record highs last year.
Burgeoning population growth from record immigration and fewer Canadians buying homes will increase rental demand, but supply will also be more plentiful as a more than 40-year high of rental completions is expected in 2023.
Vancouver once again tops the list of 35 cities for average monthly rent. In December, average monthly rent in the city for a one-bedroom home was $2,596, and average monthly rent for a two-bedroom was $3,562.
Year over year, average monthly rent in December for a one-bedroom in Vancouver was up 16.8 per cent and up 17.9 per cent for a two-bedroom. But month over month, average rent was down in Vancouver in December for a one-bedroom home by 1.4 per cent and down 1 per cent for a two-bedroom.
Toronto finished second on the list of 35 cities for average monthly rent in December for a one-bedroom at $2,457 and second for average monthly rent for a two-bedroom at $3,215.
Year over year, average monthly rent in December for a one-bedroom in Toronto was up 21.3 per cent and up 18.1 per cent for a two-bedroom. But month over month, average rent was down in Toronto in December for a one-bedroom home by 3 per cent and down 3.9 per cent for a two-bedroom.
Montreal came in 24th for average monthly rent in December for a one-bedroom home at $1,580 and 21st for average monthly rent for a two-bedroom at $2,073.
Year over year, average monthly rent in Montreal in December for a one-bedroom was up 5.4 per cent and up 5.3 per cent for a two-bedroom.
Calgary average annual rents are rising quickly among Canadian major markets. The city finished a tick below Toronto with a 22.6 per cent increase in average rents to $1,816 per month in December for purpose-built and condominium apartments.
In Toronto, average rents were up 22.7 per cent year over year in December to $2,775, and in Vancouver, Canada’s most expensive city for renters, average rents increased 21.2 per cent to $3,080 per month for purpose-built and condominium apartments.
The Ottawa and Edmonton markets ranked fourth and fifth for rent growth in December for condo rentals and apartments with annual increases of 14.5 per cent and 11.7 per cent, respectively, while average rents rose only 6.6 per cent annually in Montreal.
Among medium-sized markets, annual rent increases of over 30 per cent for purpose-built and condominium apartments in December were recorded in cities experiencing some of the fastest rates of population growth in 2022, including Kitchener (31.4 per cent), Halifax (31.3 per cent) and London (30.2 per cent).
Also ranking high on the list for annual rent growth in December for purpose-built and condominium apartments were markets that border Toronto and Vancouver, including North York, Scarborough, Surrey and Burnaby — posting annual increases of between 23.6 per cent and 27.1 per cent.
Year-over-year rent increases were also high in December in markets south and west of Toronto, including Brampton (22.7 per cent), Hamilton (21.2 per cent), St. Catharines (20.5 per cent), Etobicoke (20.1 per cent), Mississauga (17.9 per cent), and Burlington (16.5 per cent).
Other medium-sized markets with above-average annual rent growth for condo rentals and apartments in December included Victoria (19.9 per cent), Lethbridge (17.3 per cent) Saskatoon (15.5 per cent), Regina (14.4 per cent),and Lloydminster (13.7 per cent), Kingston, (13.7 per cent), and Winnipeg (12.1 per cent).
Provincially, rising rents correlated with population growth.
Nova Scotia, along with other Atlantic provinces, had the fastest growing population in 2022, and the highest average annual rent increase at 31.4 per cent for purpose-built and condominium apartments in December.
British Columbia and Alberta had the second and third highest population growth in 2022, and also the second and third highest annual rent increases for condo rentals and apartments in December at 18.5 per cent and 16.8 per cent respectively. Ontario came in fourth for population growth and for rising annual rents up 15.5 per cent for purpose-built and condominium apartments in December.
The slowest growing province for both population and rents in 2022 was Quebec, with a year-over-year increase in December of 6.9 per cent.