Rent prices grew at record pace in 2022 as Canada saw lowest vacancy rate in decades
TORONTO — Rent prices in Canada grew at a record pace last year as the country saw the lowest vacancy rate since 2001, the Canada Mortgage and Housing Corp. said.
In a report released Thursday, the federal housing agency said the average rent for a two-bedroom purpose-built apartment, which it uses as its representative sample, grew 5.6 per cent to $1,258 compared with the previous 12-month period.
The CMHC said this increase is a new annual high in data going back to 1990.
The report also said last year’s surging real estate market saw the lowest vacancy rate for purpose-built rentals in decades leaving those searching for a rental property with even fewer options.
The vacancy rate for such properties sat at 1.9 per cent last year, down from 3.8 per cent a year earlier.
The CMHC says the fall reflects a widespread tightening in the rental market as immigration ticked upward following a pandemic slowdown and higher mortgage rates made it harder for renters to purchase properties, which skyrocketed in price at the start of 2022.
Though declining in recent months, the Canadian Real Estate Association said the national average home price still sat at $626,318 in December, down 12 per cent from the same month last year.
Such prices and a stubbornly high inflation rate left many stuck in the rental market, which favoured tenants for much of the pandemic but suddenly tipped toward siding with landlords.
The power shift made finding and paying for a rental tougher and more costly.
“Lower vacancy rates and rising rents were a common theme across Canada in 2022,” said Bob Dugan, CMHC’s chief economist, in a news release.
“This caused affordability challenges for renters, especially those in the lower income ranges, with very few units in the market available in their price range.”
The tightening was stark in Vancouver, where the vacancy rate edged down from 1.2 per cent in 2021 to 0.9 per cent last year, and Toronto, which dropped from 4.4 per cent to 1.7 per cent.
Montreal’s rental market reached 2.3 per cent from 3.7 per cent a year earlier and Calgary’s moved from 5.1 per cent to 2.7 per cent, the lowest level seen since 2014.
In Edmonton, it dropped from 7.3 per cent to 4.3 per cent and in Ottawa, it crept down to 2.1 per cent from 3.4 per cent.
The vacancy rate in Halifax did not change in 2022, staying at the record low of 1 per cent.
The plunging vacancy rates drove up rental prices.
Along with the increase for two-bedroom purpose-built units, CMHC found the average rent for a two-bedroom rental condo jumped nine per cent to $1,930.
CMHC said higher rent growth was widespread geographically with the sharpest increases seen in Vancouver and Toronto. The average rent for a two-bedroom purpose-built unit in Vancouver was $2,002 and $1,779 in Toronto.
Rentals.ca similarly found the average listed rent for all property types increased 12.2 per cent year over year to reach $2,005, an increase of $217 from the December 2021 average of $1,788.
However, on a month-over-month basis, average rents decreased by about one per cent, which the site chalked up to “a typical seasonal occurrence.”
The small decrease is far from the relief low-income renters need.
The share of rental units that were affordable — when the person or people renting a unit are collectively spending no more than 30 per cent of their gross income on rent — for the lowest-income renters was, in most markets, in the low single digits or too low to report, CMHC said.
The share of rental units that were affordable to low-income renters was so low in areas including Toronto, Ottawa, Windsor, Hamilton, Sudbury, Kingston and Belleville that CMHC couldn’t even report figures on the matter.
In other areas like Calgary, Winnipeg, Halifax and Vancouver, the share was five per cent or less.
Markets in Quebec were an exception to this trend with 25 per cent of rental units affordable to low-income earners, followed distantly by Prairies locales like Regina and Saskatoon, where the figure sat at eight and seven per cent, respectively.
Read the full January 2023 Rental Market Report
This report by The Canadian Press was first published Jan. 26, 2023.