Rental prices Canada-wide are rebounding, and while much of that is being driven by robust economic and market fundamentals -- especially in Toronto and Vancouver -- other factors are at play as well.
Owing to mass inoculation against COVID-19, Canada’s economic outlook has become propitious again, thanks to consumer spending which has breathed life back into cities. Also spurred by workers returning to offices located in urban cores, rental demand is surging and even beginning to mirror pre-pandemic levels.
According to the latest National Rent Report from Rentals.ca and Bullpen Research & Consulting, the average rent for all Canadian properties listed through the portal rose by 9% year over year in April to $1,676, and while the same month last year represented a nadir for rental prices, the average rent last month was only $25 lower than during April of 2020 and 2019.
“Average rental rates for single-family homes, townhouses and condominium apartments have experienced strong month-over-month growth as demand increases for higher-end properties,” said Ben Myers, president of Bullpen Research & Consulting. “Big city rents are surging with Vancouver and Toronto leading the way. A return to the office, high gas prices, and rising interest rates are all fuelling demand for centrally located rental offerings.”
Vancouver Has Canada’s Priciest One-Bedroom Rentals
The third-largest metropolitan region in the country has its most expensive one-bedroom rental rates, averaging $2,334, while two-bedroom apartments averaged $3,324. Although the city has made concerted efforts throughout the past decade to grow its purpose-built rental stock in lieu of heavy reliance on condominium rentals, even amending single-family lot zoning requisitions to encourage development of secondary units -- and in spite of its relative success -- satisfying demand is proving insuperable.
Another reason Vancouver’s rental market is so strong is the city wasn’t encumbered by COVID-19 strictures as severe as they were in other parts of the country, notably Montreal and Toronto, and, in addition to benefiting from fairly manageable virus outbreaks, with around 95% of the city’s businesses no larger than 50 employees, return-to-office mandates were likely much easier to execute, which almost certainly buoyed the rental market.
Toronto Roars Back to Life
Reminiscent of those heady pre-pandemic days, Toronto is once again bustling, with retail, restaurants and bars returning to full capacity and the downtown core’s offices welcoming back employees. In stark contrast to the first few months of the pandemic when around 50,000 people left Toronto, people are returning, including students both domestic and international.
As a result, and at an average of $2,065, Canada’s largest city had the second-highest rental rate for one-bedroom apartments out of 35 surveyed cities, according to the report -- an increase of 13% year-over-year -- while the average rent for two-bedroom apartments rose by 17.2% to $2,849. On a monthly basis, rental rates for one- and two-bedroom apartments in Toronto grew by 2.1% and 2.6%, respectively, in April.
There were four other municipalities in the GTA that ranked among Canada’s 10 most expensive rental markets last month. Burlington had the third highest one-bedroom apartment rental prices last month, increasing by 15.9% year-over-year to $2,017 a month, and its two-bedrooms, which had the eighth-highest average in the country, rose by 11.8% over April 2021 to $2,261.
Oakville had the fourth-highest average rent in Canada for one-bedroom apartments last month at $2,010, an 8.1% increase over April 2021, while its two-bedrooms, which ranked seventh, rose by 3.4% to an average of $2,333. On a monthly basis, one-bedrooms in Oakville increased by 5.3%, but two-bedroom rental prices only increased by a nominal 0.09%, the report said.
Etobicoke was ranked the fifth most expensive out of 35 cities for average one-bedroom rental prices in April at $1,897, representing 10.7% growth over the corresponding period last year, however, two-bedroom rentals significantly increased -- the 15.9% year-over-year growth brought the average $2,446.
Although Etobicoke is closer to Toronto than Burlington and Oakville, rental prices were most likely lower in April because the city’s purpose-built rental stock is old and hasn’t been adequately replenished, and while condo rentals can be found closer to the waterfront, they’re far from plenteous. Etobicoke, being an inner suburb, also has more rental inventory than owner-driven housing markets like Oakville and Burlington.
Mississauga had Canada’s seventh most expensive one-bedroom rental apartments in April, averaging $1,817 for 5.3% year-over-year growth, while two-bedrooms -- the tenth most expensive of the 35 cities examined -- saw 7.6% growth to $2,211.
Montreal’s Reputation for Affordable Rent is Intact
Montreal is the second-largest city in Canada but, ranking the average cost of one-bedroom apartment rentals, the report placed it twenty-first out of 35 cities at $1,489, and nineteenth for two-bedroom unit rentals at $1,952.
Although rents have increased in recent years, the Montreal region still benefits from having roughly five times more rentals units than Toronto and Vancouver.
Condo Rental Rates Surge
The average condominium rental in Vancouver’s surged by 25% year over year in April to $2,748, while the same units rose by 15% in both Toronto and Etobicoke to $2,303 and $2,173, respectively.
By province, British Columbia had the highest average rental rates for all property types in April at $2,347, followed by Ontario at $2,093.
