Rental market in Canada shows signs of recovery: National Rent Report

The average monthly rent for all Canadian properties listed on Rentals.ca in July was $1,771, up $1 over June but still down 8.1 percent year over year, according to Rentals.ca’s and Bullpen Research & Consulting’s latest National Rent Report.

The report reveals that the $1 increase represents the first time the average rent increased on a monthly basis since September 2019, despite the 9.4 decrease in average asking rents nationally from that market peak of $1,954 that month.

Average monthly rents for single-family homes were down 14.9 per cent year over year in July, and condominium rentals were down 11.4 per cent year over year for the month. Both at the higher end of the market have declined every month since the COVID-19 pandemic started.

However, apartments at the lower end of the market experienced lower rents only in April and May. In July, apartments, which make up the majority of the listings on Rentals.ca, experienced a year-over-year increase of 5.8 per cent.

According to the report, the rental market is recovering, but the national data for all property types will not show this recovery until the luxury rental market returns, which could take some time.

The report additionally suggests that immigration needs to return, boomers need to feel comfortable moving down to rental suites, and affluent young professionals need to feel the need to be back in city centres leasing new condos.

Toronto still led the list in July for highest average monthly rent for a one-bedroom home at $2,051, but rents for a one-bedroom in the city have dropped for the fifth straight month. Vancouver took the top spot for average monthly rent for a two-bedroom at $2,797.

On a city level, almost every major city and former municipality experienced a decline in average rents year over year for apartments and condominium rentals, except Montreal where average rents were up 11 per cent year over year in July.

“With the exception of Montreal, rental rates are flat or declining in most major metropolitan areas in Canada,” said Matt Danison, CEO of Rentals.ca. “Some tenants are looking for larger units in less affluent areas to accommodate their work-from-home needs.”

Toronto and Vancouver average rents for apartments and condominium rentals declined 8 per cent year over year, while Calgary rents were down 9 per cent. York, Saskatoon, North York, Regina, Red Deer and Winnipeg all experienced double-digit drops from July 2019 to July 2020.

At least temporarily, downtown Toronto has become less valued by tenants, who can easily move elsewhere when their lease is up, and return a year later.

COVID-19 is changing the dynamics of how renters are choosing where to live, and the pandemic has affected the core of Toronto more than other areas of the GTA, according to the report.

“This pandemic has Canadians rethinking their housing needs. For many tenants their home has gone from simply a place to rest their head, to their home office and day-care space,” said Ben Myers, president of Bullpen Research & Consulting. “The proximity to work and their daily commute has been a major factor in Torontonians’ decisions about where to live, but clearly not in the short term, as a significant portion of employees work from home. The Rentals.ca data is clearly showing that there is less demand for the more expensive downtown core condos for rent in Toronto.”

The chart shows Toronto’s downtown core, broken up into nine postal codes. Each postal code with condominium apartment rental listings has the average rent, annual change in average rent and rent per square foot shown for July 2020. On a postal code level, average rents have dropped as much as 22 per cent annually.

In Montreal, rents have continued to rise. In July, average monthly rents are up 21.6 per cent for a one-bedroom home year over year and up 15.8 per cent for a two-bedroom.

On a provincial level, Ontario had the highest rental rates in July, with landlords seeking $2,069 per month on average (all property types); this is down 0.7 per cent monthly and 9.4 per cent annually. British Columbia had the second highest rental rate at $2,029 per month, up 0.5 per cent from June and 7.4 per cent  from July 2019.

Average rents are up in Quebec on a year-over-year basis, but down in Alberta, Saskatchewan and Manitoba.

The average rent per square foot for condominium rentals and apartments in Canada have been going in opposite directions. Condos are down 6.8 per cent annually from $3.26 per square foot in July 2019 to $3.07 per square foot in July 2020. Rental apartments have risen by 12 per cent annually, increasing from $1.94 per square foot in July 2019 to $2.20 per square foot in July 2020.

Condominium apartments are listed for rent at a 20 per cent to 30 percent premium over the average rental apartment in Alberta, British Columbia and Ontario, which is down from 30 per cent to 35 per cent from six months ago.

For the third straight month Red Deer has finished last on the list with the least expensive rent for a one-bedroom home in July at $872 and for a two-bedroom at $1,022.

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