Asking rents in Canada continued to hit new highs in September, increasing by 1.5% from August and by 11.1% from a year ago to an average of $2,149. With year-over-year growth rising back into double-digits, the annual rate of rent inflation accelerated to a nine-month high.
Annual Rent Growth Back into Double-Digits to Reach Nine-Month High
While rent increases remained exceptionally strong in most major markets during September, the annual rate of rent growth slowed substantially in Toronto last month, which may signal a broader impending moderation for rent inflation in the months ahead as the economy cools and renters face mounting affordability constraints. This was visible in the sharp rise in rental activity for shared units.
One Bedroom Apartments Post Strongest 1-Year Rent Increase
Asking rents for purpose-built and condominium apartments averaged a record high $2,078 in September, increasing 1.6% month-over-month and 13.3% year-over-year. One-bedroom apartments recorded the fastest annual growth in asking rents of 15.5% to reach $1,905. Two-bedroom apartment rents rose 13.1% from a year ago to an average of $2,268, while three-bedroom rents were up 11.4% annually to an average of $2,514. The least expensive apartments, represented by studios, recorded annual rent growth of 11.3% to reach an average of $1,511.
Nova Scotia and Alberta Lead Rent Growth in September
The annual rate of rent growth for purpose-built and condominium apartments in September was strongest in Nova Scotia and Alberta at 15.4% and 15.3%, respectively. Average asking rents for apartments in Nova Scotia reached $2,088, while rents in Alberta increased to $1,663.
Quebec posted the third fastest annual growth for purpose-built and condominium rents in September at 13.0%, closely followed by year-over-year growth of 12.3% in B.C. Average asking rents in B.C. were the highest among all provinces at $2,656, while Quebec’s asking rents of $1,970 fell below the national average.
In Ontario, the annual rate of rent growth slowed from 9.9% in August to 6.6% in September. Asking rents also experienced a 0.4% month-over-month decline to an average of $2,486 (second highest rents by province).
Toronto Rent Growth Slows to 2-Year Low
Among Canada’s largest markets with a population of at least one million, Calgary maintained its lead with annual growth in asking rents for purpose-built and condominium apartments of 14.3% in September, reaching an average of $2,091. Rent increases in Montreal also stayed in the double-digits last month as average asking rents rose 10.2% year-over-year to $2,030.
Each of the six largest markets experienced a slower rate of annual growth in asking rents for purpose-built and condominium apartments last month when compared to August. However, the deceleration was most pronounced in Toronto, where rent growth slowed from 8.7% to 2.3% — the slowest annual rate of increase in two years. On a month-over-month basis, rents in Toronto were largely unchanged (+0.1%).
Highest Priced Rental Markets Surround Vancouver and Toronto
Among Canada’s medium and smaller markets, annual rent growth for purpose-built and condominium rental apartments in September remained strongest in Richmond (part of Greater Vancouver) at 28.9%, followed by Cote-Saint-Luc (part of Greater Montreal) at 27.5%. Red Deer, Alberta placed third with annual growth of 21.8%. Oakville represented the fastest rising market for rents in Ontario, with annual growth of 19.4%. Within smaller provinces, rents rose the most over the past year in Halifax (+15.5%) and Regina (+13.4%).
Four of the five most expensive mid-sized markets in Canada were located in Greater Vancouver, including North Vancouver with average asking rents of $3,481 for purpose-built and condominium apartments, Burnaby ($3,062), Coquitlam ($2,976) and Richmond ($2,940). Ontario’s most expensive markets outside of Toronto were all located in the Greater Toronto Area and included Oakville, averaging asking rents of $2,960 for purpose-built and condominium apartments, Brampton ($2,704), Vaughan ($2,697), Mississauga ($2,687), Etobicoke ($2,634), and North York ($2,629).
Roommate Rental Listings Have Surged
As renters look to save on costs by obtaining roommates and property owners try to mitigate soaring mortgage payments by offering up space for rent, the volume of listings for shared accommodations over the past three months has grown 27% compared to last year. This included a 40% increase in listings in B.C. and a 78% increase in listings within Ontario.
Average asking rents for shared accommodations increased 18% year-over-year in September to $944 per month. In B.C, roommate rentals averaged $1,156 per month, up 17% annually, while Alberta rents for roommate units rose 20% from a year ago to $857. The average asking rent for shared accommodations was $1,049 in Ontario and $864 in Quebec, rising 8% and 19% annually, respectively.
The data used in this analysis is based on monthly listings from the Rentals.ca Network of Internet Listings Services (ILS). This data differs from the numbers collected and published by the Canada Mortgage Housing Corporation (CMHC).
The Rentals.ca Network of ILS’s data covers both the primary and secondary rental markets and includes basement apartments, rental apartments, condominium apartments, townhouses, semi-detached houses, and single-detached houses. CMHC’s primary rental data only includes purpose-built rental apartments and rental townhouses. CMHC also collects data on secondary market rentals, but this is reported separately.
CMHC’s rental rates are based on the entire universe of purpose-built rental units (rental stock), regardless of rental tenure. CMHC rental rates are reflective of what the average household spends on rental housing and not the current market rents for vacant units. The data used in this report is based on the asking rates of available (vacant) units only and reflect on-going trends in the market. This covers a smaller sample size but is more representative of the actual market rent a prospective tenant would encounter. The Rentals.ca Network of ILS’s data typically provides much higher rental rates compared to CMHC, as vacant units typically reset to market rates when not subject to rent control.
The average and median rental rates in this report can also skew higher than CMHC’s data for the following reasons: the inclusion of larger more expensive unit types such as single-family homes, townhouse units, and large luxury condominium units; the presence of duplicate or multiple listings at the same property and the survivorship bias where more expensive or over-priced units take longer to lease and remain in the sample longer.
Properties listed for greater than $5,000 per month, and less than $500 per month are removed from the sample. Similarly, short-term rentals, single-room rentals, and furnished suites are removed from the sample when identifiable.