Canadian landlords will be increasing rents in 2019 as strong demand for rental housing continues amid high home prices and tighter mortgage lending rules.
Average rents nationally will rise 6% but in Toronto they could be almost double that at 11% with Ottawa (9%) and Vancouver (7%) also set for large increases.
The figures are from the National Rent Report from Rentals.ca and CEO Matt Denison says Toronto’s forecasted jump is the result of new supply becoming available.
“Toronto rents have been pulled up by recently completed high-design condo apartments for lease,” he said. “Landlords can rent their inventory for significantly more than older rental apartments.”
The average Canadian rental property on Rentals.ca was listed at $1,754 per month in November 2018, a decrease of 4.4% month-over-month.
“The new mortgage stress test, higher interest rates and home prices have dramatically increased the number of people looking for rental accommodation this year,” Danison added. “Many young couples and families have decided to postpone purchasing a home, which has driven two-bedroom rental rates to nearly $2,600 a month in Toronto and over $2,000 a month in Ottawa.”
Bubble fears boosting renting
Industry analyst Ben Myers, president of Bullpen Research & Consulting Inc. added that the sales market in the GTA is creating extra demand for rentals.
“There is trepidation among potential homebuyers following the bubble-like conditions and the subsequent price correction in the GTA housing market last year” Myers said. “Many Torontonians are choosing to lease instead of buy, with existing tenants staying put to avoid paying the higher market-rate for an available unit. This phenomenon has reduced rental listings in this high-demand environment.”
Rental.ca’s Danison agrees, adding that high immigration and strong employment is fueling demand for housing but buyers are cautious.
“Flat or declining resale house prices due to current and expected future credit tightening has deterred many would-be first-time buyers from entering the ownership market. That demand overflow is being felt in the rental market, where very few Canadian markets are offsetting demand with new rental supply.”