In North Vancouver, B.C., the rental market saw a slight decline. In October, apartment rental prices dropped by 1.2% compared to the same month last year. This change comes as a shift in the housing landscape. (Ben Nelms/CBC)
For the first time since July 2021, annual rent prices in Canada have dropped, showing a 1.2 per cent decrease this October compared to the previous year, as reported by Rentals.ca and Urbanation. This change marks a significant moment after years of rising rent prices. However, this decrease is mostly limited to urban areas in Ontario and British Columbia.
The average rent across Canada now stands at $2,152 per month, down $50 from June’s peak of $2,202. While this decline offers slight relief to tenants, it highlights a challenging trend in rent affordability. In July 2021, the last time a drop was recorded, average rent was much lower at $1,752 per month, indicating a $400 difference compared to current figures.
Geordie Dent, executive director of the Federation of Metro Tenants' Associations in Toronto, recognized the decline as positive but cautioned that achieving true affordability remains a long way off. According to Dent, the rental market still has significant room for improvement before tenants experience stability similar to previous years.
Rent prices have particularly dropped in major cities like Toronto, Montreal, Vancouver, and Calgary. However, the story is different in smaller and mid-sized markets, where rent continues to climb as more people search for affordable options outside large urban areas. Shaun Hildebrand, president of Urbanation, noted that such national-level rent declines are unusual. He attributes the change to a combination of factors: slowing economic growth, a plateauing population increase, and improved affordability in homeownership. These factors, which had previously driven rent hikes, are now reversing.
Hildebrand anticipates that this downward trend will persist as new rental units continue to be completed. Over the past five to six years, Canada has witnessed a surge in rental construction. Steve Pomeroy, an industry professor at McMaster University's Canadian Housing Evidence Collaborative, highlighted this boom in rental development, noting that many units from this construction wave are finally entering the market, easing pressure on demand.
A fall housing supply report by the Canada Mortgage and Housing Corporation supported this view, showing record-breaking apartment completions in major cities, except Montreal and Vancouver, where challenges persist. According to Pomeroy, increased supply combined with recent changes in federal policies around temporary foreign workers and international students has contributed to relieving housing demand.
Some landlords, especially those managing condo-heavy rental markets in cities like Toronto, have started lowering their rents to attract tenants and fill vacant units. As rental prices have already risen to their peak, the market can only accommodate so much before adjustments are necessary. This, combined with the current market trends, has finally exerted downward pressure on rents, creating a scenario where prices have started to recede after years of escalation.
In summary, while rents in major Canadian cities have decreased, affordability challenges persist, and rents in smaller markets continue to rise. The additional supply of new apartments and changing demographics have contributed to this shift, signalling a change in Canada's rental landscape.
