Although rent prices across Canada rose in January, they have still not recovered to pre-pandemic levels.
The average rent for all property types listed on Rentals.ca in January was $1,807 per month, up 4.4% from January 2021 and up 1% from December 2021, according to the site’s latest figures. That’s still down from an average of $1,879 in January 2020 and $1,855 in January 2019.
Rent prices across the country plunged at the onset of the pandemic due to factors such as lower immigration levels, universities switching to online learning and increased supply from Airbnb units switching to long-term tenancy.
But with the removal of COVID restrictions and as immigration and tourism have picked back up in recent months, so too have the rental prices.
It was a different story for home prices in Canada, which have been on a steady upward trajectory since the start of the pandemic.
As of January, the national average sale price posted a 21% year-over-year gain to a record high of $748,450, according to data from the Canadian Real Estate Association.
Detached house rentals in high demand
That may be part of the reason we’re seeing such demand for single-family home rentals—many renters still desire to become homebuyers, but they are simply unable to enter the market given the current conditions.
While overall rents are only up slightly, single-family homes are in high demand, with the average monthly rent up nearly 20% over the past year to $2,652.
In comparison, the average rent for condo rentals increased 13.8% to $2,227, while monthly rent for apartments (such as purpose-built rentals and units in houses) was up just 2.1% to $1,639 in January.
Not all markets are the same
Of course, Canada is a large and diverse country and all rental markets—like housing markets—are the same.
While the national average monthly rent was up 4.4%, Vancouver renters saw a more extreme jump of 12%, bringing the monthly cost of a two-bedroom apartment to $3,003.
Toronto wasn’t far behind, where rents for a two-bedroom units now average $2,769, a 14.5% year-over-year increase.
The majority of markets that saw some decreases in rent costs were in Alberta and Saskatchewan.
The lowest average rents in the country are currently in Newfoundland and Saskatchewan, with monthly rates at $969 and $1,026, respectively.
Canada’s gap between rent and mortgage payments among the largest
Renting a three-bedroom apartment is now about 32% cheaper than buying a comparable property, according to a new study by Comparethemarket.com.
That’s one of the largest gaps in the world, with Canada ranking at number 10. Beating out Canada are many European countries, where house prices are so expensive that renting can be over 40% cheaper than owning – Luxembourg, Latvia and Slovakia take the top three positions.
In the past, renting was sometimes considered to be a poor financial decision, but the rent vs. buy debate has been cast in a new light now that house prices in most markets are so high.
“Renting doesn’t always mean you’re just throwing money away and just making your landlord richer,” financial commentator Patricia Lovett-Reid told CTV late last year. “It’s a decent strategy to take that money and invest it in the market. You can be renting and still have wealth creation..Particularly if you’re young.”
Nevertheless, most Canadians still dream of homeownership. A full three quarters (75%) of Gen Z adults said they plan to buy a home, despite the affordability hurdle.
Is this latest rise in rent prices a temporary or seasonal bump, or is it the beginning of a more sustained upward trend back to pre-pandemic levels? Only time will tell.