The average monthly rental rate in Canada increased by four per cent in May following two months of declines, but demand for apartments is expected to remain strong, according to new data from Rentals.ca.
“It is clear that there isn’t going to be any change to the mortgage stress tests, which will continue to curb ownership demand and boost rental demand nationally,” Bullpen Research & Consulting Inc. president Ben Myers told RENX in an interview regarding the June national rent report.
The data is compiled and analyzed by the rentals website and Bullpen, a Toronto-based boutique real estate advisory firm.
“The population grew by nearly 100,000 people in Canada in the first quarter, another strong result that will boost rental demand,” said Myers. “However, there seems to be consensus among economists that interest rates will stay unchanged in the near future, which may entice more people to try to get into home ownership, which could take some pressure off the rental market.”
Toronto continues to lead the list for the average monthly rent for a one-bedroom home at $2,231. Canada’s largest city also took over the top spot from Vancouver for average monthly rent for a two-bedroom unit at $2,735.
“There is a lot more activity on Rentals.ca from private landlords listing their condo units for lease in Toronto than in Vancouver,” said Myers. “The continued strength of the ownership condo market, compared to some softness in Vancouver, is pulling all monthly housing costs up in Toronto.”
On a per-square-foot basis, rents increased by seven per cent to $2.54 over the past three months in Ontario. Rents rose by 14 per cent to $2.28 per square foot in British Columbia over the same period. Myers believes the B.C. increase is likely a statistical anomaly due to smaller units hitting the market.
Average rental rates in Ontario continue to outpace other provinces, as it costs a tenant about $600 more per month to live in a rental apartment in Ontario than in Alberta, Saskatchewan, Manitoba or Quebec. Rents are trending up in B.C., Manitoba, Ontario and Quebec, but heading downward in Alberta and Saskatchewan.
Quebec City has the lowest average monthly rent of the 34 cities surveyed in the report, with a one-bedroom unit going for $837 and a two-bedroom suite priced at $1,006.
Montreal attracts Ontario developers
Several Ontario apartment developers are looking farther south in Quebec for their next project, however, as Montreal rental rates continue to trend upward — especially in the downtown core.
“A lack of available lands in Toronto, extended approval timelines and rapidly rising construction costs are giving pause to some developers in the Greater Toronto Area,” Myers explained. “Montreal is much more affordable, resulting in more end-user buyers and a wider pool of potential purchasers overall.
“Investors are the primary purchasers of new condos in Toronto, and they can be swayed heavily by negative news regarding the outlook for future price appreciation and rent growth. A major decline in investor purchasers would sink a project.”
Renting has also traditionally been seen as a more socially acceptable option in Quebec.
“Developers are also looking at rental in Montreal given the greater acceptance of renting as a viable housing choice and the surge in downtown rental rates in recent years.”
Halifax apartment renters top searches
Halifax is the most in-demand municipality, as ranked by Rentals.ca page views per listing, with 85 for every unit listed on the site. Ottawa is a distant second with 60 views and Victoria is third at 47.
“I don’t know if people in Halifax do a lot of comparing across multiple buildings, so they’re constantly clicking back and forth on different units,” said Myers. “Perhaps they’re indecisive, or there are a lot of dissatisfied tenants that are always looking for a better apartment than the one they have.
“Another potential explanation is that Rentals.ca could be the best or most trusted website for listing activity in the Halifax Regional Municipality, which leads to more website traffic.”
Data, methodology for Rentals.ca’s report
Rentals.ca data includes basement apartments, rental apartments, condominium apartments, townhouses, semi-detached houses and single-detached houses. Properties listed for above $5,000 and below $500 per month are eliminated from the sample of units analyzed.
Short-term leases, single-room rentals and furnished rental units are also eliminated from the sample when they can be identified.
The national rent report charts and analyzes national, provincial and municipal monthly rental rates and market trends across all Canadian listings on Rentals.ca.
The company says its numbers show vacated properties, which better reflect current values and the actual rents a potential tenant would encounter when seeking to rent an apartment.