The rise in prices is due in part to higher interest rates, which are cooling the home buying market and in turn putting more pressure on rents. Here are five charts that show some of the numbers behind the issue.
Rents are going up
After pandemic-induced declines in 2020 and 2021, rental prices in Canada are on the rise again. The median rent for all property listings on Rentals.ca for the second quarter of 2022 was $1,750, a seven per cent increase over the same period last year. Listings include detached houses, semi-detached houses, townhouses, condominium apartments, rental apartments and basement apartments. Year-over-year growth in the second quarter of 2022 continues the trend. Average rents nationally also rose year-over-year in the previous two quarters. However, rental prices across Canada have yet to reach pre-pandemic levels, which saw the median rent reach $1,825 in the fourth quarter of 2019. British Columbia saw the highest annual increase in average rent at nearly 25 percent. Meanwhile, Nova Scotia has seen double-digit growth throughout the pandemic. In 2021, the province’s business development agency launched a marketing campaign to attract remote workers. In 2022, the province introduced a new tax on non-resident homeowners.
Income against rent
The Canada Mortgage and Housing Corporation defines “affordable” housing as housing costs that are less than 30 percent of a household’s pre-tax income. Factoring in rent and utilities, CBC News calculated how much a household would need to earn to keep the average cost of a two-bedroom apartment under that threshold. In Vancouver, where the average monthly rent for a two-bedroom apartment has reached a staggering $3,597, a household would have to earn a gross income of more than $150,000 for that rent to be considered affordable. In Toronto, a household must make more than $135,000.
Housing costs over everything else
The Consumer Price Index (CPI) analysis also gives a sense of how housing has hit Canadians’ wallets. The CPI measures changes over time in the prices of goods and services such as food, clothing, transportation, health care, recreation, and, of course, housing. While prices tend to rise over time in an economy, the cost of shelter has risen at a faster rate than anything else we buy. From 2002 through most of 2004, “everything else” costs grew at a higher rate than housing costs. But in late 2004, the rise in the cost of housing began to outpace the rise in the cost of everything else. Apart from a period in August and September 2005, this trend has continued since then.
Roommate households are gaining popularity
Some people have turned to living with a roommate or flatmate to reduce rental costs. Cohabiting households – which StatsCan defines as two or more people living together who are not part of a census family – are the fastest growing household type in Canada. While they still represent only a small share of all Canadian households (four per cent), the 663,835 cohabiting households in 2021 represent a 54 per cent increase since 2001.
