Increase in Rental Rate, Side Effect of Stress Test?
The cost of apartment rental in Canada shot up 0.9 per cent in a single month in January of 2019, according to Statistics Canada, the fastest one-month leap since August, 1989.
And what’s going on is rental rate increases that are quite widespread, spreading well from the priciest markets to affordable markets. The latest data on asking rates for apartments from rental site Padmapper shows double-digit increases in 12 of the 24 cities covered.
Asking rates for one-bedroom apartments in Toronto jumped 10.2 per cent over the past year, to an average of $2,270, while in Vancouver rates rose 4.5 per cent, to $2,080, and Montreal rents jumped 11.1 per cent, to $1,500.
Many experts say that this increase in the rental rate has to do with the prospective buyers priced out of market due to unrealistic housing price in major markets such as Toronto and Vancouver, mortgage stress test forcing buyers out of the market and rising interest rates further forcing buyers to stay in rental housing longer.
The outlook does not look any brighter for prospective buyers for at least next few years. Canada’s population growth has accelerated over the past few years, leading to the fastest population growth in several decades. A Bank of Montreal report from last year suggested the experts may be underestimating how much new housing Canada needs.
According to Immigration, Refugees and Citizenship of Canada, planned permanent resident admission to Canada is 330,800 admissions for 2019, 341,000 admissions for 2020 and 350,000 admissions for 2021. Compared to 205,710 admissions in 2000 and 252,530 admissions in 2001, recent numbers show increase in immigrants moving to Canada further putting pressure Canada’s rental housing market.
Some policy analysts say a lack of purpose-built rental housing and government-subsidized housing is contributing to the problem. Most governments in Canada long ago stopped adding to their stock of affordable housing, and are now struggling to maintain their existing housing stock. Rental apartment construction has been slow for decades, even as condo construction has exploded.
Source:Canadian Rental Rates Rise At Fastest Pace In 30 Years – Huffington Post 03/03/2019