Rents Across Canada Continue to Spike With Influx Of Newcomers

Demand for rentals continues to soar, taking rent prices with them. And the massive influx of newcomers to Canada continues to drive demand.

Renting has long been the more affordable and easier option compared to buying a home in Toronto. Right now, the average price for a house in Ontario's capital is $1,078,900, according to the Canadian Real Estate Association (CREA). Most first-time homebuyers can't get approved for a mortgage to finance a home at this price point, and can't even gather enough for a down payment.

That's why so many Canadians rent, because it's the only option, besides moving away from the city.

Influx Of Newcomers Continues to Drive Rent Prices Higher

There are a few key reasons why rent continues to spike, including low condo vacancy rates and decreased housing affordability. But one of the big drivers of the rapid increase in rent prices is the continuous wave of immigrants who look for rental units.

Immigrants are more likely to live in rental properties compared to the overall population in Canada. That's understandable, given the magnitude of moving from one country to another. But the increased demand for rentals continues to put pressure on rent prices, making it difficult for everyone, including newcomers, to find an affordable place to rent.

Rent Prices Have Spiked Year-Over-Year

According to Zumper.com, the average rent price for a 1-bedroom apartment in Toronto as of February 2023 is currently $2,350. That's a whopping 24% increase from the same time last year.

Meanwhile, mortgage interest rates have also soared and now sit at 6.7% from Canada’s big banks. That's a huge difference from the 2% average rate that homebuyers took advantage of just a decade earlier.

Increase in Housing Starts Still Not Enough

With so many people looking for affordable housing, the demand for rentals continues to tighten. There just aren't enough rental units to accommodate those looking for a place to live. As demand continues to outpace supply, we won't see an easing in rent prices any time soon.

Interestingly, housing starts in Toronto in 2022 were the highest they've been in a decade, according to the Canada Mortgage and Housing Corporation (CMHC). At 45,109 units, 2022 saw 7.6% more housing starts than in the previous year. But clearly, these increases aren't enough.