Inflation and a lack of new supply are the top reasons why apartment rental rates continue to increase, according to a survey of tenants.
A majority of respondents, 26.6%, said inflation and insufficient construction of new units by 18.3% of respondents in simplydbs' second annual Canadian multiresidential satisfaction report. The survey asked renters more than 70 unique questions from May to mid-July about what they considered the No. 1 reason for rising rents.
The high cost of owning a home and immigration and migration tied for the third-highest reason for rising apartment rents at 16.8%, according to the survey.
10.8% of respondents cited the "financialization of housing," a theme in the federal government's latest budget that focuses on the impact of corporate ownership of rental properties, as a reason why rents have risen so fast.
"(Landlords) were the lowest indicator out of all the areas that we asked," said Sarah Segal, who cofounded Toronto-based Simplydbs and spoke at the Canadian Resident Data and Multi-Residential Market Update event this month.
During her presentation, Segal said she included the financialization of housing as a reason for rising rents at the request of someone who works for a larger pension fund that owns apartments.
"You didn't ask them why the rents were rising and give them an easy out (like) greedy landlords," she said. "So, we put it in, and it was the least selected answer."
Her company's report noted the national apartment vacancy rate rose to 3% in the second quarter, up slightly from a quarter earlier.
Rent growth slows
Simplydbs said the national average in-place rent reached $1,521 monthly in the second quarter, a 6.3% year-over-year increase. The study said the growth rate has slowed but is well above the long-term trend.
Even with vacancy rising, the annual apartment turnover rate has dropped to 22.9% nationally, indicating fewer residents are choosing to move out. With some sort of rent control in effect in eight of Canada's 10 provinces, residents might be choosing to stay put rather than test the latest market conditions.
In 2024, the federal government said it would confront the financialization of rental units and asserted that housing should be treated as homes for people instead of a speculative asset class. Ottawa has promised a homebuyers' bill of rights and a renters' bill of rights.
The latest numbers from rentals.ca found average asking rents for all residential property types in Canada increased by 3.3% year-over-year in August, reaching an average of $2,187 per month. This was the slowest annual rate of rent growth in nearly three years.
"Rent increases in Canada finally returned to their longer-term average after nearly three years of excessive growth," said Shaun Hildebrand, president of Urbanation, a firm that conducted the study with rentals.ca, in a statement. "This was achieved through a combination of more supply being built, as well as a rollback in demand from population-related changes in government policies."
The federal government has capped the number of international student visas, which some have suggested has impacted the rental market.
Simplydbs said its survey found the size of an apartment was the most important thing to renters, followed by price and then location. The survey found the vacancy rate for smaller bachelor apartments increased to 5.3% as renters looked for larger units.
While tenants are not blaming landlords, the survey makes it clear renters are struggling. Almost 35% are getting outside help with their monthly rent, and 29.1% say they needed support to make the deposit.
"People are in financial strife, and there is a housing shortage," Simplydbs' Segal said.