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A new housing report has confirmed a tough truth: Canada’s rental market has become more crowded than a gym’s weight room in early January.
Driving the news: According to new data from the Canada Mortgage and Housing Corporation, both rent prices and the number of empty rental units reached new records last year, creating the tightest rental market the CMHC has ever documented in Canada.
- The report found that the average price of a two-bedroom apartment shot up 8% nationally, and the vacancy rate fell to a record low of 1.5% in October.
- A 1.7% boost in rental supply last year was nowhere near enough to keep pace with demand, a dynamic that has driven rent well out of the average renter’s price range.
Why it matters: This isn’t a record any country wants to break. The supply and demand imbalance speaks to how dire Canada’s housing affordability issue has become, especially at a time when high interest rates are deterring many Canadians from buying homes.
- Elevated mortgage interest payments, driven by high interest rates, are expected to keep driving up shelter costs in both the rental and homeownership markets in 2024.
Big picture: The squeezed market has prompted some pretty out-of-the-box thinking on both sides of the rental market, whether it’s Canadians turning to lease swaps, bunk beds and tiny homes, or developers converting office space into apartments.
- Calgary, which saw the biggest annual jump in rental prices, launched a program that incentivizes developers to turn underused office towers into residential housing.
Bottom line: The federal government’s move to cap the number of international student visas and offer tax breaks for new rental construction could help ease the pressure in major markets, but with wages still being outpaced by rising rents, it’ll be a while until affordability has a chance to be restored.—LA