If you needed any further evidence that Canada’s largest cities are experiencing a housing crisis, the latest rental price data from Padmapper should do the trick.
Rental rates have spiked by more than 15 per cent in Canada’s largest cities — Toronto, Montreal and Vancouver — over the past year.
Already the priciest market in the country for apartment rentals, Vancouver saw the largest spike in prices of any city covered in the Padmapper survey, with one-bedroom apartments up 15.8 per cent in the past year, to an average of $2,120. Two-bedroom apartments in the city now average $3,200.
Toronto prices jumped 15.5 per cent, with one-bedroom apartments about to break the $2,000 mark, averaging $1,940. Montreal saw rental rates jump 15 per cent, with one-bedrooms averaging $1,230.
Other cities, including Halifax, London and Sherbrooke, saw double-digit price increases as well. Rental rates were weak on the Prairies, where the oil price collapse continues to be a drag on the economy. Rates fell one per cent in Calgary and 10.5 per cent in Edmonton over the past year.
Above: Percentage change in the average rental rate for a one-bedroom apartment, from Sept. 2016 to Sept. 2017, in select Canadian cities. Source: Padmapper
The experts are pointing to a significant lack of rental housing supply in Canada’s major cities.
According to CMHC data for 2016, Toronto’s apartment vacancy rate was just 1.3 per cent, while Vancouver’s was a miniscule 0.7 per cent. Generally, any rate below 3 per cent suggests an “unhealthy” housing market, says a new report from Ryerson University’s City Building Institute.
“A key reason for the declining health of our rental market is an over-reliance on private condominiums,” the report’s authors wrote.
Watch: Canadian cities where you can afford a home on $50,000 a year
They noted that in the past ten years, Toronto’s rental market saw the addition of 2,400 purpose-built rental units, and 76,000 private rental condo units.
“In other words, over the past decade, growth in the Toronto Area rental market has been entirely reliant on individuals and commercial property managers buying condos and putting them onto the rental market.”
That makes for a more precarious rental market, the report argues, because private condo owners can remove their units from the market very rapidly, making for an unpredictable housing supply.
Additionally, “the reliance on condos for our rental market has contributed to property speculation that has helped push home-ownership prices upwards,” the report authors argued.
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Greater Toronto needs to build about 8,000 purpose-built apartment units annually to relieve the crisis, the report concluded.
“Ramping up to 8,000 new units per year cannot happen overnight, but with immediate actions by various levels of government, we can get there within five to ten years,” the authors wrote.
Here’s a complete rundown of rental rates in cities surveyed by Padmapper:
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Author: Daniel Tencer