Average rent down 8.1% in Canada year over year

by Matt Danison from Rentals.ca and Ben Myers Bullpen Consulting

Vancouver rent for a two-bedroom still tops the list, but rents in all categories are down year over in the city

Since March, when COVID-19 fears accelerated, tenants have wanted to be near grocery stores and parks -- and live in a quiet neighbourhood

The average rent for all Canadian properties in October increased .7 percent month over month to $1,782, after four months of almost no change, according to Rentals.ca’s and Bullpen Research & Consulting’s latest National Rent Report.

Year over year, the average rent for all property types listed on Rentals.ca in the country is still down -- by 8.1 percent in October. But that’s an improvement over September’s annual decline of 9.5 percent.

“The average rent in Canada trended up in October, which we partially attribute to an increase in new purpose-built rental apartment listings,” said Matt Danison, CEO of Rentals.ca. “We continue to see an increase in listings nationally, which tells us that supply is outpacing demand. This market imbalance suggests soft rental market conditions will continue for the rest of the year.”

Vancouver finished first on the list of 35 cities for average monthly rent in October for a one-bedroom home at $2,712 and third for average monthly rent for a one-bedroom at $1,901.

Year over year, average monthly rent in Vancouver was down 4.3 percent for a one-bedroom and 8 percent for average monthly rent for a two-bedroom.

Richmond came in eighth for average monthly rent in October for a one-bedroom home at $1,671 and for average monthly rent for a two-bedroom at $2,126.

Burnaby finished ninth for average monthly rent in October for a one-bedroom home at $1,648 and sixth for average monthly rent for a two-bedroom at $2,247. 

New Westminster came in 15th for average monthly rent in October for a one-bedroom home at $1,565 and 13th for average monthly rent for a two-bedroom at $2,021.

Victoria finished 16th for average monthly rent in October for a one-bedroom home at $1,561 and 10th for average monthly rent for a two-bedroom at $2,058.

Although North Vancouver was not included on the list, average monthly rent in October for a one-bedroom home was $1,861, and average rent for a two-bedroom was $2,589.

Surrey was also not on the list, but average monthly rent in the city in October was $1,518 for a one-bedroom home and $1,777 for a two-bedroom.

As several of Canada’s major cities see declining rental rates, other secondary markets are seeing rents increase. Demand is down and supply up overall, but demand is shifting geographically.

“The rising rents in several smaller municipalities, as well as the significant increase in web traffic on Rentals.ca in Ontario suggests many prospective tenants are widening their search area when looking for a rental property,” said Ben Myers, president of Bullpen Research & Consulting, “With many choosing to go back to where they grew up or attended university to avoid the lofty Toronto area rental rates.” 

This trend is opening up more vacancies and causing lower rents for smaller units in downtown and metropolitan areas.

Toronto, Vancouver, Mississauga, North York, and Oakville saw monthly rent levels decline 5 percent to 17 percent in October 2020, while in October of last year, all of those areas experienced increases of 5 percent to 14 percent.

Year over year, average monthly rent for all property types in Vancouver decreased 5 percent in October, while average rent increased 10 percent annually in October 2019.

Rents for condominium and rental apartments in Vancouver have declined year over year with one-bedroom suites down 3 percent and two-bedroom suites down 6 per cent. 

Toronto rents have continued to nosedive with one-bedroom units down 17 per cent year over year and declining every month since January and two-bedroom units down 14 per cent annually and declining month by month since July. 

North York led the list of 35 cities for average monthly rent in October for a one-bedroom home at $1,945, and Vancouver led the list for average monthly rent for a two-bedroom at $2,712. 

Toronto finished second -- for the first time on this list -- for average monthly rent for a one-bedroom home at $1,922. It’s the second straight month average rent for a one-bedroom has been under $2,000. 

The less expensive markets are even getting cheaper, with rent declines in Regina and Saskatoon year over year. 

But in Montreal year-over-year average monthly rents are up 15 per cent for a one-bedroom unit and 9 per cent for a two-bedroom. 

Access to groceries is a top priority for prospective tenants followed by proximity to transit in the Vancouver, Toronto and Montreal Census Metropolitan Areas (CMAs), according to data from Local Logic in Montreal. 

"In the three major Canadian metropolitan areas of Vancouver, Toronto and Montreal renters’ interest in living closer to grocery stores has consistently grown since the pandemic began in March," said Guy Tsror, data scientist for Local Logic. "Linking this change with the decline in renters' interest in car-friendliness and public transit-friendliness captures the impact the pandemic has had on renters in Canada, and that it still strongly affects renters' decisions in choosing their next home."

Since March, when pandemic fears accelerated, tenants have shown a greater interest in being close to grocery stores, a desire to be in a quiet neighbourhood -- which makes sense when working from home -- and being in proximity to parks, which is much needed when many activities are shut down due to COVID-19. 

On the flip side, with fewer people commuting to work, the desire for car-friendly and transit friendly locations have subsided slightly in October 2020 compared to March 2020. 

Other takeaways from the November National Rent Report include:

• Real Estate Investment Trusts, developers and institutional owners still believe downtowns will thrive again and the work-from-home phenomenon will lose its luster. But the data shows for now that the urban exodus is continuing -- online pageviews and rental rates are increasing in many secondary markets, and tenants’ desire to be in car-friendly or transit-friendly central apartments has declined slightly.

• Expect additional supply via completions and evictions, as landlord and tenant boards wade through the backlog, and government financial assistance programs are discontinued.

• Lloydminster had the lowest average monthly rents on the list of 35 cities in October for a one-bedroom home at $746 and for a two-bedroom at $897.

• Tenants will pay $325 more in rent to go from a studio or bachelor unit to a one-bedroom unit in Canada, and to upgrade from a one-bedroom to a two-bedroom unit, they’ll spend about $300 more on average. After that, a third bedroom will cost tenants $270 more in Canada.

• Average monthly rents for condominium rentals have dropped 17 per cent year over year in Canada to $2,084. Apartments have experienced growth annually of 5 per cent following an 8 per cent rise last year. Part of that rent inflation is likely attributable to a number of new completions pulling the average up.

The National Rent Report charts and analyzes monthly, quarterly and annual rates and trends in the rental market on a national, provincial, and municipal level across all listings on Rentals.ca for Canada. 

The Rentals.ca numbers show vacated properties that better reflect current values. The figures better represent the actual rents a potential tenant would encounter when seeking to rent an apartment.