Rents just dropped across Canada for the first time in 3 years — but here’s why many renters are ‘still struggling to get by'

CBC News reports the average rent cost across Canada is $2,152 per month, down $50 a month from June's record high of $2,202 per month, with the caveat being this drop may be driving up prices elsewhere.

To compare, in July 2021 during the last rate drop, the average cost of rent was $1,752 per month.

What are some of the key drivers of this trend?

Key drivers impacting rentals in big cities

Population-driven policies from the federal government are lowering the numbers of foreign students and workers, resulting in a higher supply of units available for rent.

The government policy that puts a cap on international students has resulted in some of the downward pressure on rental rates, with Global News reporting a 45% decline nationally.

The Temporary Foreign Worker policy announced changes effective September 2024, to reflect a 10% cap to reduce Canadian companies’ reliance on foreign workers.

An increase in rental construction is another key driver impacting rental rates.

According to the Canadian Mortgage and Housing Corporation, nearly half of the apartments started in 2024 were purpose-built rentals.

Furthermore, the numbers of rentals are going up as homeownership affordability goes down.

Shaun Hildebrand, the president of Urbanation, told CBC News he expects the downward rental rates trend to continue, “This is happening as the key drivers of rent growth in recent years — a strengthening economy, quickly rising population and worsening homeownership affordability — are beginning to reverse.”

So why, despite lower rates, are renters still struggling to find affordable places to rent?

‘We’ve got a long way to go…’

While rates are falling in the big cities, renters in smaller markets are seeing an uptick in pricing.

Canadians are looking outside of urban centres for housing, and the smaller markets are seeing a surge in demand as a result.

The average rent has jumped 22% in Quebec City to $1705, and 18% in Regina to $1418 this year. These rising rental rates in smaller cities are balancing out the reductions in larger cities.

Interprovincial migration contributed to demand in Calgary and Edmonton’s rental market. For Alberta in particular, strong employment growth has meant an influx of working-age interprovincial migrants, and Calgary is attractive to renters for its relative affordability.

According to Zumper, Saskatoon outpaced Edmonton as the city with the fastest growing rent with one-bedrooms, up 16.8% annually.

Moreover, the latest report from the Canadian Mortgage and Housing Corporation shows that rent is outpacing wage growth, and lower-income renters face below-average vacancy rates for affordable units.

Geordie Dent, executive director of the Federation of Metro Tenants' Associations in Toronto told CBC News,“...We've got a long way to go to get back to some semblance of affordability or the standards that tenants used to enjoy."

Sources

1. CBC:Annual rental prices fell for the 1st time in over three years, but only in big cities, by Jenna Benchetrit (Nov 7, 2024)

2. Government of Canada:Canada to stabilize growth and decrease number of new international student permits issued to approximately 360,000 for 2024 (Jan 22, 2024)