The Canadian rental market, known for its resilience, is showing signs of transformation. While most major markets in Canada reported rent increases in September, a potential slowdown is emerging, particularly in Toronto. The latest National Rent Report by Rentals.ca and Urbanation paints a dynamic picture of the country’s rental landscape.
Toronto’s Decelerating Rent Growth Sparks Economic Speculation
Canada’s largest rental market, Toronto, experienced a deceleration in rent growth last month. This deceleration has raised questions about broader economic implications and increased affordability constraints for renters. Experts suggest that this trend may be indicative of a broader economic cooling and a change in renter preferences, with shared accommodations gaining popularity.
Shaun Hildebrand, President of Urbanation, noted, “While rent inflation in Canada remained exceptionally strong in September, most major markets experienced a slower annual rate of rent growth compared to recent months. This was particularly true in Toronto, where rents grew by their slowest pace in two years.”
One-Bedroom Apartments Lead the Way in Rent Increases
One-bedroom apartments have seen the most significant annual growth in asking rents, surging by 15.5 percent and now averaging $1,905. Two-bedroom units also saw substantial year-over-year growth, increasing by 13.1 percent to reach an average rent of $2,268. Three-bedroom apartments followed suit with an 11.4 percent increase, now averaging $2,514. Studio apartments considered the most affordable option, experienced annual rent growth of 11.3 percent, with an average rent of $1,511.
Nova Scotia and Alberta Lead Annual Rent Growth
In the realm of purpose-built and condominium apartments, Nova Scotia and Alberta have led the way in annual rent growth, posting annual growth rates of 15.4 percent and 15.3 percent, respectively. Quebec and British Columbia also reported strong rent growth figures at 13 percent and 12.3 percent, while Ontario experienced a modest slowdown, with the rate dropping from 10 percent in August to 6.6 percent in September.
Calgary Tops Major Cities in Rent Increases, Toronto Slows Significantly
Among Canada’s major cities, Calgary led with a 14.3 percent annual increase in asking rents, reaching an average of $2,091. Montreal followed closely with a 10.2 percent year-over-year increase, reaching $2,030. However, Toronto witnessed a significant slowdown, with rent growth slowing to 2.3 percent.
Resilience in Rent Growth in Small and Medium Markets
Medium and smaller markets across Canada have continued to see strong annual rent growth. Richmond, B.C. led the way with a 29 percent increase, followed by Cote-Saint-Luc, Que. at 27.5 percent. Red Deer, Alta., ranked third with an annual growth rate of 22 percent, while Oakville, Ont. demonstrated the fastest rising rents with an annual growth rate of 19.4 percent. Halifax and Regina led the way in smaller provinces, with 15.5 percent and 13.4 percent annual rent growth rates, respectively.
Demand for Shared Accommodations on the Rise
The report highlights a notable increase in the volume of listings for shared accommodations, rising by 27 percent over the past three months compared to the previous year. This trend is particularly noticeable in B.C., with a 40 percent increase in listings, and Ontario, with a 78 percent increase. Average asking rents for shared accommodations have also grown by 18 percent year-over-year, now standing at $944 per month.
As the Canadian rental market experiences shifts in different directions, renters and investors alike will be closely monitoring these trends. Toronto’s slowdown may be a sign of evolving economic dynamics, while the increasing popularity of shared accommodations suggests a change in the way Canadians approach housing options.
